MAYBANK Investment Bank upgraded builder and property firm IJM Corp Bhd (3336) to a "buy" with a target price of RM5.50, saying near-term newsflow on potential awards could intensify in the months leading to the announcement of the 10th Malaysia Plan.
"Positive order flow momentum could trigger a further re-rating of the stock in our view," it said in a report yesterday.
It noted that IJM has also been aggressively bidding for contracts in India. The firm's recent lacklustre order flow in India was due to a deliberate decision by its management to cut back on tenders amid an environment of high operating costs, it said.
"(But) with the recent normalisation of building material prices and borrowing costs, we believe management will resume normal bidding for Indian jobs," it said in a report yesterday.
It noted that the outlook for the non-construction divisions remained positive also.
It forecast the construction division to only account for 12 per cent of IJM's 2011 earnings. It believes the property and building materials divisions would remain as the firm's main earnings contributors, accounting for 31 per cent and 30 per cent earnings respectively.
In Peninsular Malaysia, IJM is looking to tender for packages in major infrastructure projects such as the Pahang Selangor Water Transfer Project, the Low Cost Carrier Terminal project and the Klang Valley Light Rail extension, it said.
Previous posts regarding IJM:
http://cathoon.blogspot.com/2010/03/ijm-wb-up-14.html
http://cathoon.blogspot.com/2010/03/ijm-unit-wins-rm600mil-job.html
http://cathoon.blogspot.com/2009/01/ijm.html
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