IJM-WB up 14%

Macquarie Equities Research reiterated its buy call on IJM and raised the target price to RM6.00 from RM5.50 following a review of the company's prospects. 


IJM is one of the broker's top picks in Malaysia, saying that the firm will be a key beneficiary of infrastructure spending, both domestically and in international markets such as India and the Middle East.

Potential catalyst to IJM's share price could be the award of the Besraya extension job in fourth quarter this financial year, new construction wins and successful property launches.

"We see IJM as a beneficiary of India's aggressive road spending plans, given its track record. Recent press reports indicate the Indian government's plans for US$50 billion (US$1 = RM3.41) worth of road projects over the next two years.

"Any potential wins in India are positive for the company and would add to IJM's existing orderbook of RM4.4 billion. In total, we have assumed RM1 billion worth of new jobs in financial year 2010 and RM2 billion in financial year 2011," Macquarie said in a January 22 report.

In addition to potentially clinching key domestic projects via its construction division, IJM's building materials division, ICP (Industrial Concrete Product), may also benefit from the increased construction activity, it noted. 

IJM-WB (warrant) up 14% since I last talked about it last Saturday. What makes it more interesting is IJM-WB still comes with a discount of 3.6%. It is trading at RM1.17. With a gearing of 4.06, it should moves up another 14% (3.6% X 4.06) or RM0.16 to RM1.33 to eat up all the discount. It still has another 148 days before it expires. Sooner or later, the discount has to be realized.

GOon