IJM Corp: BUY, fair value RM5.43

AmResearch Sdn Bhd has not changed its earnings estimates for IJM Corp Bhd (3336) despite the latter receiving a contract worth RM350 million for new works on the Penang Bridge.

"The latest contract already forms part of our new orderbook assumptions for the financial year 2011 forecast (FY11F)," it said in a report.

IJM was awarded a contract that will include the construction of a new dual two-lane carriageway of 5.7km with a cloverleaf interchange and four bridges.

"The bridge contract would bump up IJM's new contract wins to RM597 million for FY11F. This follows an earlier contract that it secured for two packages under the Murum Dam access roads in Sarawak worth a combined RM47 million," said AmResearch.

It added that since the bridge award was held on an open tender basis, it estimates that margins for this job would be in the region of 5-6 per cent.

"This compares with our FY11F-12F margin assumptions of 3.6 per cent-4.4 per cent respectively," it said.