IJM: Significant Data Centre Contract Fuels Order Book Growth, ‘Buy’ Rating Maintained
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | MYR3.62 (+40.3%) |
| Last Traded | MYR2.58 |
| Recommendation |
A leading investment bank has reiterated its “BUY” recommendation for a prominent Malaysian conglomerate, maintaining a target price of MYR3.62, which represents an attractive upside of 40.3%. The positive outlook follows the company’s recent securing of a substantial new data centre project, significantly bolstering its construction order book and future prospects.
New Contract Wins Bolster Order Book
The company recently secured a MYR1.3 billion contract for a core-and-shell package for a data centre (DC) block and related infrastructure within the hyperscale DC development at Elmina Business Park, Selangor. This marks the company’s inaugural DC project in the strategically important Klang Valley region and its fifth DC job overall. The project is slated to commence in Q4CY25 and is expected to be completed by Q2CY27.
This latest achievement brings the company’s total secured DC jobs to approximately MYR3.5 billion (based on effective share). Including this new win, the company’s total job wins for fiscal year 2026 (FY26) now stand at MYR4.2 billion, moving closer to its internal target of MYR6 billion. The domestic outstanding order book has consequently increased to about MYR7.4 billion, with DC jobs accounting for a significant 38% of this total, valued at MYR2.8 billion.
Notably, this Selangor project is the second largest DC job secured by the company, following a MYR1.4 billion contract for a facility in Mukim Pulai, Johor Bahru. The investment bank also anticipates potential additional Mechanical & Electrical (M&E) works for the same DC, which could be worth an estimated MYR1 billion.
Future Outlook and Prospects
The company’s robust pipeline for future work remains strong. It is understood to have submitted bids for 4-6 more DC jobs across the Klang Valley and Johor in the current calendar year. Furthermore, progress on existing DC projects, such as Telekom Malaysia’s DC in Iskandar Puteri, is advancing well, indicating the company’s readiness to undertake and complete further DC contracts efficiently.
Beyond data centres, potential upcoming wins include other DC projects in key regions and a civil servant housing contract within Indonesia’s new capital, Nusantara. Despite the substantial new job, earnings estimates for FY26 remain unchanged, as the latest win falls within the investment bank’s existing job target assumptions. While the overall sentiment is positive, a key downside risk highlighted is potential sluggish job replenishment trends.
