IJM: Industrial Projects Drive Optimism, Buy Rating Maintained
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent review highlights a positive outlook for a leading construction group, driven by robust progress across its key industrial warehouse projects. Despite no immediate changes to earnings estimates, the steady execution of these significant developments underpins a maintained “Buy” recommendation from analysts.
Project Progress Driving Confidence
A recent site visit to Shah Alam revealed significant advancement on three major warehouse-related projects. The Shah Alam International Logistics Hub (SAILH) Phase 1, valued at MYR654m, is estimated to be 90-95% complete. This facility, commissioned by Global Vision Logistics (GVL), features a four-storey warehouse complex, multi-level parking, and an office block. The presence of international players like Maersk underscores the strategic importance of this logistics hub, with industrial jobs (excluding data centers) contributing an estimated 10-15% of the total domestic order book, valued at MYR8.4bn.
The second project, a MYR584m logistics hub (Plot A) in Section 15, is approximately 70-80% completed with six stories already constructed and is expected to reach completion by 1HCY26.
Further south in the Elmina area, the MYR284m Exio Logistics Hub, which broke ground in February 2025 on a 22-acre site, is over 90% complete as of end December 2025. The group’s strategic move to form a 50:50 joint venture with FMM Elmina to develop this hub signals a new stream of recurring income and enhanced expertise in industrial development. This is further bolstered by the group’s acquisition of a 25% stake in SAILH developer GVL in January 2024.
Future Outlook and Risks
The positive trajectory of these projects and strategic investments is expected to enhance both recurring income and industrial development know-how for the group. Upcoming sizeable contract wins, such as the potential MYR1bn civil servant housing job in Indonesia’s new capital city Nusantara, are anticipated to further propel the stock’s performance above current trading levels.
However, a key downside risk remains the potential failure to secure new contracts in a timely manner, which could impact future growth. Despite this, the overall outlook for the group remains positive, supported by strong project execution and strategic diversification into industrial development.
