By Sharen Kaur
Published in NST on April 12 2011
While IJM Corp Bhd is more well known for its construction business, it is actually Malaysia's second biggest expressway operator after PLUS Expressways Bhd.
Its most recent wins earlier this month, to build a new major highway and an extension to an existing highway, highlight how the group has evolved into a major conglomerate.
"The inclusion of WCE (the West Coast Expressway) would further solidify IJM's position as the second largest expressway operator in Malaysia after PLUS," AmResearch said in a report.
In fact, IJM Corp made more money from running toll highways than building roads or properties for the year to March 31 2010.
Its concession division made a profit before tax of RM95.8 million for the year, more than three times the PBT that it made under its construction business.
It owns five highway concessions in India and three in Malaysia. It is likely to add to this tally.
Earlier this month, IJM got the approval in-principle from the Prime Minister's Department to build another 10km for its New Pantai Expressway, linking the Pantai toll interchange to Ampang, Kuala Lumpur.
IJM's 22.7 per cent associate Kumpulan Europlus Bhd also received the approval in-principle to build the 380km West Coast Expressway linking Banting, Selangor to Taiping, Perak.
Analysts estimate the two projects to be worth around RM900 million and RM6 billion respectively.
Sean Liong Cheng Fatt, an analyst from MIDF Research believes it is IJM's long-term strategy to build its concession business.
He said the two road projects will not only boast its concession segment but double its current order book of RM4 billion.
OSK Research reckons IJM's construction order book could jump by as much as 70 per cent from the new road projects.
This is the main advantage for IJM when it comes to infrastructure projects. Not only it can build them, giving it profits from construction work, it can also operate them under long term contracts, which provides a stable, recurring income for the group.
"The longer the period that has lapsed since the concessions started, the better the profits. It is good for IJM to build its concession arm," said Pong Teng Siew, Jupiter Securities head of research.
"Some of IJM's existing concessions have run a long time so the absolute amounts in profits have built up to the kind of levels seen now," he said.
Shares of IJM have gained some 2 per cent so far this year, mirroring the gains made in the broader market in the same period.
The stock closed at RM6.39 yesterday.
-ENDS-
Published in NST on April 12 2011
While IJM Corp Bhd is more well known for its construction business, it is actually Malaysia's second biggest expressway operator after PLUS Expressways Bhd.
Its most recent wins earlier this month, to build a new major highway and an extension to an existing highway, highlight how the group has evolved into a major conglomerate.
"The inclusion of WCE (the West Coast Expressway) would further solidify IJM's position as the second largest expressway operator in Malaysia after PLUS," AmResearch said in a report.
In fact, IJM Corp made more money from running toll highways than building roads or properties for the year to March 31 2010.
Its concession division made a profit before tax of RM95.8 million for the year, more than three times the PBT that it made under its construction business.
It owns five highway concessions in India and three in Malaysia. It is likely to add to this tally.
Earlier this month, IJM got the approval in-principle from the Prime Minister's Department to build another 10km for its New Pantai Expressway, linking the Pantai toll interchange to Ampang, Kuala Lumpur.
IJM's 22.7 per cent associate Kumpulan Europlus Bhd also received the approval in-principle to build the 380km West Coast Expressway linking Banting, Selangor to Taiping, Perak.
Analysts estimate the two projects to be worth around RM900 million and RM6 billion respectively.
Sean Liong Cheng Fatt, an analyst from MIDF Research believes it is IJM's long-term strategy to build its concession business.
He said the two road projects will not only boast its concession segment but double its current order book of RM4 billion.
OSK Research reckons IJM's construction order book could jump by as much as 70 per cent from the new road projects.
This is the main advantage for IJM when it comes to infrastructure projects. Not only it can build them, giving it profits from construction work, it can also operate them under long term contracts, which provides a stable, recurring income for the group.
"The longer the period that has lapsed since the concessions started, the better the profits. It is good for IJM to build its concession arm," said Pong Teng Siew, Jupiter Securities head of research.
"Some of IJM's existing concessions have run a long time so the absolute amounts in profits have built up to the kind of levels seen now," he said.
Shares of IJM have gained some 2 per cent so far this year, mirroring the gains made in the broader market in the same period.
The stock closed at RM6.39 yesterday.
-ENDS-
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