KUALA LUMPUR (July 12): RHB Research Institute Sdn Bhd has upgraded IJM Corp Bhd to “Buy” at RM2.35 with a higher target price of RM2.78 (from RM1.91) and said this comes on improved visibility in terms of securing new construction orders, a possible upward revision in new property sales for FY20F, the possible disposal of its toll road assets at fair value thus giving rise to the possibility of special dividends, and robust growth expectations for Kuantan Port.

In a note today, the research house said while the loss of the LRT3 contract dealt a blow to IJM – the RM1.1 billion contract formed 14% of its RM7.8 billion outstanding orderbook – it is not entirely detrimental to the company.

“For starters, the contract was likely to be scaled-down  significantly anyway – by more than 30% based on our estimates, if it had remained.

“Meanwhile, minimal work and investments pertaining to the contract were done. Seen positively, uncertainties on the outcome of negotiations regarding IJM’s LRT3 contract have not been lifted.

“The share price correction, albeit shallow, could present investors who missed out on IJM’s impressive YTD rally with an opportunity to purchase its shares.

“We expect earnings to grow at a CAGR of 9.7% during FY20F-22F,” it said.