IJM: Construction Firm Secures Multi-Billion Data Centre Contracts, Rating Maintained

A leading construction conglomerate has significantly expanded its order book with a series of major data centre project wins, prompting an investment bank to reiterate its “BUY” recommendation. The latest research report from RHB highlights substantial contract acquisitions that are expected to bolster the company’s future earnings prospects. The bank has maintained its target price at MYR3.62, signaling a 37% potential upside for investors.

Recent Contract Wins Bolster Order Book

The company recently secured an MYR874 million contract for mechanical and electrical (M&E) fit-out works related to a hyperscale data centre at Elmina Business Park (EBP). This significant award follows an earlier MYR1.3 billion core-and-shell package for the same data centre, bringing the total contract value for this single EBP project to a substantial MYR2.1 billion. With these latest additions, the company’s effective share of data centre job wins has reached approximately MYR4.4 billion, elevating its total domestic outstanding orderbook to an estimated MYR8.2 billion. Data centre projects now represent a significant portion, about 45%, of its domestic outstanding orderbook.

Future Prospects and Strategic Bidding

Looking ahead, the construction firm is actively pursuing further growth opportunities, having submitted bids for 4-6 new data centre projects across the strategic Klang Valley and Johor regions, slated for award in CY25. Analysts anticipate potential additional wins from other data centres in these areas, as well as a civil servant housing contract in Nusantara, Indonesia’s new capital. The report emphasizes the company’s proven capacity to undertake and successfully complete more data centre projects, building on its progress with earlier developments such as the Iskandar Puteri DC for Telekom Malaysia, which recently celebrated its topping-out ceremony.

Investment Outlook and Identified Risks

Despite the strong positive momentum from new job acquisitions, the investment bank noted that its near-term earnings estimates remain unchanged. This is primarily because the latest job win falls within its existing FY26 job target assumption of MYR6 billion. While the outlook is largely positive, a key downside risk identified in the report is the potential for sluggish job replenishment trends. However, the maintained “BUY” rating and the MYR3.62 target price, which incorporates a 2% ESG premium, underscore the bank’s confidence in the company’s sustained growth potential and strategic positioning in the booming data centre market.