Wednesday 18 January 2012

RHB Research maintains underperform on IJM Corp, FV RM4.48

KUALA LUMPUR (Jan 18): RHB Research Institute is keeping its Underperform call on IJM Corporation and lowered the fair value by 2% from RM4.59 to RM4.48.

In its research note on Wednesday, it said the Rating Agency Malaysia (RAM) in December 2011 downgraded credit ratings of the debt and hybrid capital of IJM’s 50%-owned Lebuhraya Kajang-Seremban Sdn Bhd (Lekas), the concessionaire for the 44km Kajang-Seremban Highway, to non-investment grades.

“IJM may at some point have to make impairment provision on its RM290 million investment in Lekas comprising: 1) RM50 million ordinary shares; and 2) RM240 million RCULS,” it said.

RHB Research said its greater fear is the failure of Kajang-Seremban Highway may have repercussions on the bankability and hence viability of the RM3bn West Coast Expressway (WCE), the single largest job that will underpin IJM’s CONSTRUCTION [] earnings over the short to medium term.

“FY03/12-FY14 net profit forecasts are trimmed by 3% per annum, having imputed share of RM20 million net loss per annum from Lekas. Fair value reduced by 2% from RM4.59 to RM4.48. Maintain Underperform,” it said.



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