Written by Joseph Chin
Wednesday, 07 October 2009 11:40
KUALA LUMPUR: Maybank Investment Research has downgraded IJM Corp to hold after its share price had risen 130% year-to-date compared with the 30-stock FBM KLCI's 38% increase.
It said on Wednesday, Oct 7 that at current levels, IJM share price had substantially priced in potential job wins from major domestic infrastructure projects now at various pre-award stages.
"While there is still upside to the share price as sentiment on CONSTRUCTION [] stocks stays high, we are Holders of IJM at 16.4x 2010 price-to-earnings ratio (PER), instead of Buyers," it said.
IJM's construction margins are expected to improve after jobs affected by 2008's high construction cost are completed.
Of the estimated RM4 billion outstanding order book, Maybank Research estimated that 60% were jobs secured prior to mid-2008, some were more affected by the higher costs.
"Blended construction pretax margins should stay weak at below 5%, at least into 3QFY10 (1QFY10: 1.7%) as near-term works recognition would come from the higher cost jobs. This is slightly longer than our earlier anticipation," it said.
