Speaking to reporters after the company’s AGM and two EGMs yesterday, its chief executive officer and managing director Datuk Krishnan Tan Boon Seng said: “Our chewing rate is RM200 million per month. So, in order to replenish our order book we will need to secure new projects of more than RM2 billion (during the year).”
However, the target of RM2 billion was a conservative one and the company would seek more projects if the construction sector turned bullish, considering that the company had much more capacity than that, Tan said.
IJM Corp’s existing order book worth more than RM4 billion was evenly divided 50:50 between foreign and local projects.
On the local front, the company plans to bid for construction works on major projects such the low-cost carrier terminal (LCCT) and the proposed light rail transit (LRT) project in the Klang Valley.
IJM Corp had put in its application for the pre-qualification phase of the LCCT project, Tan said. He added that the company was interested in both the runway works and terminal buildings as the group had expertise in both areas.
As for the LRT projects, tenders were expected to be called this month but there were no announcements as yet, he said.
As for the Pahang-Selangor water transfer project, of which IJM Corp is part of a four-company consortium for the construction of a 44.6 km-long tunnel to channel water into Selangor, several other tenders were expected to come up for “the intakes, the dams and all the ancillary infrastructure”.
However, the larger contract was the water treatment plant that would be located “over the hill in Selangor would only come up later,” said Tan.
On overseas prospects, he said recent stimulus packages announced by most countries in Asia augured well for construction players like IJM Corp. It is bidding for projects in India, Bahrain and Abu Dhabi.
At the company general meetings yesterday, shareholders passed all resolutions including a two-for-five bonus issue as well as a one-for-ten rights issue.
Tan said that with shareholders’ approval yesterday the bonus issue would be scheduled for October.
Also yesterday, the IJM group announced the first-quarter ended June 30, 2009 results of holding company IJM Corp Bhd and two subsidiaries — IJM Land Bhd and IJM Plantations Bhd.
For the quarter, IJM Corp posted a 22.5% year-on-year drop in net profit to RM70.8 million on a 4.9% drop in revenue to RM1.16 billion from a year earlier, due to lower margins from the plantations business with the average crude palm oil price falling 32% to RM2,249 from RM3,306 a year earlier. No dividend was declared.
However, all other sectors — property, industry and infrastructure divisions were doing well, Tan said.
Overall performance of the group for the remainder of the year would depend on the amount of the drop in performance from the plantation division in the financial year ending March 31, 2010 (FY10) as it would unlikely achieve the same stellar results as in FY09, he said.
IJM Plantations’ net profit fell by 82.1% to RM7.8 million in its first quarter ended June 30, 2009 from RM43.7 million a year earlier as a result of the lower CPO prices and fruit production. Revenue fell 40.5% to RM94.3 million from RM158.5 million, while pre-tax profit fell 80% to RM11.3 million.
IJM Land posted a 229% jump in net profit to RM26.7 million for the quarter on 178% growth in revenue to RM284.8 million, which the company attributed to the benefits enjoyed by the enlarged group after the acquisition of IJM Properties Bhd.
This article appeared in The Edge Financial Daily, August 26, 2009.