Ikhmas Jaya Group Bhd(April 20, 74.5 sen)
Maintain buy call with an unchanged fair value of RM1.00. We continue to like Ikhmas Jaya as a beneficiary of key infrastructure and property development projects, given its specialisation in piling and foundation works, building works, bridge construction, and prefabricated building systems (PBS).
To recap, the group secured RM438 million worth of new jobs year-to-date (YTD). For financial year ended Dec 31, 2015 (FY15), it was RM206 million.
These jobs are expected to keep the group busy until August 2019. Apart from the RM166 million contract for the Opus serviced apartments, the other three contracts involve piling/superstructure works.
The new contracts exceed last year’s top-line by 63%. Ikhmas Jaya’s latest win is a RM32.9 million contract from MRCB Sentral Properties to undertake foundation works for the Cyberjaya City Centre’s exhibition centre and hotel awarded two weeks ago.
The group has already achieved 88% of our new order book target of RM500 million for forecast FY16 (FY16F). We believe more wins may be gained by year-end, and thus, there is a further upside for earnings upgrade.
The group currently has a tender book of about RM3 billion. Some of the notable projects that it is bidding for include the Pan Borneo Highway, Klang Valley Mass Rapid Transit 2 (KVMRT2), and numerous highways (Duke,Dash and Suke).
Notably, we understand that the group is targeting a Pan Borneo package with high bridge content, given its expertise in bridge construction. Ikhmas Jaya had done piling for UEM Construction’s Package V8 of MRT1 (RM98 million).
Ikhmas Jaya has also been pre-qualified with a German partner to bid for rail works for KVMRT2, which will become a new business stream for the group if successful. Ikhmas Jaya is also eyeing packages for the Light Rail Transit 3.
We estimate that Ikhmas Jaya currently has an outstanding order book of about RM708 million.
All in, we project earnings compounded annual growth rate of 26% over the FY16F-FY18F period and net margins of about 10%.
We like Ikhmas Jaya for its diversified expertise in piling, superstructure, bridge construction and PBS works.
Notably, Ikhmas Jaya can incorporate PBS content into their tenders as a value-added advantage. — AmInvestment Bank Research, April 20
IKHMAS (5268) - Ikhmas Jaya secures RM438m worth of new jobs YTD
http://www.theedgemarkets.com/my/article/ikhmas-jaya-secures-rm438m-worth-new-jobs-ytd
