IJM Corporation Bhd’s ongoing asset unlocking exercise could take up to three years to complete, with the group expected to finalise the framework for a pure construction listing within the next two months, according to Kenanga Investment Bank.
Following a recent meeting with IJM’s management after Sunway Berhad’s takeover offer, Kenanga said IJM has established a board-level committee to oversee the progress of the exercise, which includes a potential pure construction listing, an exit from its India operations and a possible listing or business trust for its local toll assets.
The research house said the proposed standalone construction listing would likely require around 12 months once the final structure is decided.
Meanwhile, IJM’s strategic exit from India is expected to take about two years, allowing the group to optimise disposal gains. Kenanga noted that book values already reflect market levels, reducing the risk of major impairments and improving the likelihood of a profitable divestment.
The plan involving local toll assets — excluding the West Coast Expressway (WCE) — may take longer due to the need for regulatory approvals concerning concession ownership.
“Consequently, a reasonable timeline to complete these three asset unlocking exercises is approximately three years,” the report said.
Kenanga expects FY2026, ending March, to remain a relatively weak year for IJM, with the property division continuing to weigh on earnings.
The property segment recorded a pre-tax loss of RM7.6 million in the first nine months of FY2026, mainly due to higher operating costs in the UK, foreign exchange effects and weaker Malaysian property sales.
However, the research house sees a stronger FY2027 ahead, supported by improved property earnings and stronger construction contributions.
Construction earnings are expected to benefit significantly from accelerated progress on two major data centre projects — a RM1.40 billion development in Pulai and a RM1.26 billion core-and-shell contract for Pearl Computing in Elmina.
Kenanga said management shares the view of other contractors that the recent war-driven rise in input costs has so far had only a manageable impact on margins.
Still, it warned that if the conflict persists for another three months, margins could come under greater pressure, particularly for fixed lump-sum contracts. Government projects remain relatively protected due to variation of price (VOP) clauses, which function similarly to cost-plus contracts.
On replenishment, IJM has already secured RM6.5 billion in job wins year-to-date, achieving its FY2026 target range of RM6 billion to RM8 billion.
This is supported by a pipeline of large-scale opportunities, including additional data centre contracts and two semiconductor projects.
Kenanga said the Penang LRT Mutiara Line Package 2 could materialise by mid-year, while the more than RM1 billion civil servant housing project in Indonesia’s Nusantara capital is expected by year-end.
The research house maintained its “Outperform” call on IJM with an unchanged sum-of-parts target price of RM3.40.
It said IJM remains attractive due to its likely participation in the Penang LRT Mutiara Line, supported by its experience in previous LRT projects, strong earnings visibility from its RM9.1 billion domestic construction order book and RM1.2 billion in new property sales during 9MFY2026.
Kenanga also highlighted Kuantan Port’s strategic role as the largest port on the East Coast and said a potential toll road divestment could help strengthen the balance sheet and serve as a rerating catalyst.
Risks to the call include weaker-than-expected construction job flows, project cost overruns, liabilities arising from liquidated ascertained damages (LAD), and rising building material costs.
