kimeng: 28 feb IJM (buy)

> Plantations and exceptional gains ruled the quarter
> IJM posted a loss per share (LPS) of 61.5sen for the 9-month period to
> Dec 2007. Distorting IJM's performance was a net exceptional loss of
> RM782m (92.3sen per share), comprising goodwill write-off of
> 109sen/share and gains from the sale of shares/subsidiary of
> 17sen/share. Excluding this, IJM's core operations posted a 93% jump in
> net profits, slight higher than expected, thanks to the strong showing
> by the plantations (pretax growth of 175%), construction division (+63%)
> and industries (+52%). Even the property division posted a 57% increase
> in profits, thanks to a lumpy RM36m profit from the sale of land and
> buildings. But the construction's performance was a little
> disappointing, with slower turnover and weaker margin than expected,
> reflecting the cost pressure. At the EPS level, IJM's growth slowed to
> only (+13% Y/Y) due to shares issued for the acquisition of Road Builder
> (M) Holdings Bhd and the conversion of warrants. No dividend was
> declared.
>
> BUY: Expecting greater news flow in H2 2008
> We have retained our BUY rating but lowered our target price to RM8.60
> (based on 18x FY09 PER). We expect greater news flow in H208 as the 9th
> Malaysia Plan kicks off in earnest. IJM's track record, especially in
> Penang, bodes well for its positioning for Malaysia's mega projects.