UOB Kay Hian
Date of Report: Thursday, 28 August 2025
IJM Corporation Bhd: Construction Shines but Property Weakness Prompts Downgrade – Comprehensive Q1 FY26 Analysis

Overview: IJM Corporation Bhd at a Glance

IJM Corporation Bhd is a prominent Malaysian conglomerate with diversified interests across construction, property development, plantations, and concession assets. The company is listed on Bursa Malaysia under the ticker IJM MK, with a sizeable market capitalization of RM10.4 billion. Major institutional shareholders include the Employees Provident Fund (18.2%), Amanah Saham Nasional (12.9%), and KWAP (9.6%).
Despite a strong rally in its share price over the past year, the company’s latest quarterly results have missed expectations, prompting UOB Kay Hian to downgrade its rating from BUY to HOLD, with a revised target price of RM3.10 per share.

Key Financial Highlights: Q1 FY26 Performance

IJM’s Q1 FY26 results revealed a mixed performance across its business segments. While construction continued to deliver robust growth, property sales lagged, dragging down overall profitability.

Additional adjustments included RM4.5m in write-backs, RM9.2m in write-downs, RM0.1m disposal gains, RM17.0m in unrealised forex gains, and RM3.7m in fair value gains on financial assets. The core net profit accounted for only 15% of UOB Kay Hian’s and 16% of consensus full-year forecasts, primarily due to weaker property sales.

Segment Analysis: Construction, Property, Infrastructure, and Industrial

Construction Segment: Outstanding Growth and Pipeline

– Revenue reached RM968.7m (+15.1% QoQ, +79.2% YoY). – Pre-tax profit of RM34.6m (-16.5% QoQ, +46.3% YoY). – Outstanding orderbook: RM12.9b (RM7.2b local, RM5.7b Singapore & UK associates). – Local replenishments year-to-date: RM2.9b, well on track to meet the FY26 target of RM6.0b-RM7.0b. – Recent contract wins included the Iskandar data centre (DC), Penang electronics warehouse, and Maple Tree Logistics Hub, which drove strong upfront margin recognitions. – Upcoming opportunities: Nusantara government housing project (RM1.0b), Penang LRT (RM4.0b), Penang Airport (RM1.2b), and road projects in East Malaysia. – Fast-track DC project in Johor is expected to lift near-term earnings and margins.

Property Segment: Sales Slowdown and Launch Caution

– Earnings dropped to RM27.2m (-77.1% QoQ, -31.9% YoY). – Total property sales: RM187.0m, down from RM256.0m in Q1 FY25. – No new project launches in Q1 FY26, following a large rollout in Q4 FY25 (GDV: RM3.4b). – Upcoming launches: RM1.7b GDV planned. – Concerns remain that sales may fall short of the RM2.0b target due to softer sentiment.

Infrastructure Segment: Narrowing Losses and Global Impact

– Pre-tax profit: RM49.2m (+60.7% QoQ, -14.9% YoY). – Ports’ pre-tax profit fell by 34.8% YoY as cargo throughput dropped to 5.8m tons (from 7.1m). – Decline in shipping activity attributed to the US tariff regime introduced in April 2025. – Toll operations: pre-tax profit grew to RM21.0m (+14.5% YoY). – Besraya and North Pantai Expressway saw earnings rise by 10.5% YoY. – Losses from WCE and overseas infrastructure narrowed. – Expectation of improved shipping activity and cargo throughput as global tariffs stabilize, but losses from WCE may widen as additional highway sections open and interest payments are reclassified as costs.

Industrial Segment: Steady Performance

– Earnings stood at RM54.3m (-1.5% QoQ, +23.6% YoY). – Revenue reached RM311.8m (+12.4% QoQ, +16.1% YoY).

Valuation and Forward Guidance: Downgrade to HOLD

– FY26F/27F/28F earnings estimates have been cut by 10%/8%/7%, respectively, due to lower property sales assumptions. – New target price is RM3.10, using a SOTP (sum-of-the-parts) valuation. – The target price implies a forward PE of 20.8x FY26 earnings, slightly above the 5-year mean. – Despite bright prospects in construction, most positives are already priced in after the share price rally.

Financial Forecasts: Profit & Loss, Balance Sheet, and Key Metrics

ESG Updates: Environmental, Social, and Governance Efforts

– Environmental: Achieved 5,176 tCO2e emissions avoidance in FY25 through renewable energy generation, waste recycling, and purchase of renewable energy certificates. – Social: RM2.4m spent on community-related social contributions during FY25. – Governance: Corporate governance aligned with the Malaysian Code on Corporate Governance.

Conclusion: Strategic Outlook for Investors

IJM Corporation Bhd continues to demonstrate resilience in its construction segment, supported by a robust orderbook and a pipeline of high-value projects. However, persistent weakness in property sales and global uncertainties impacting infrastructure have prompted a more cautious outlook.
The revised HOLD recommendation and new target price of RM3.10 reflect the belief that much of the near-term upside is already captured in the current share price. Investors should monitor property sales trends and global infrastructure dynamics closely, while keeping an eye on upcoming contract wins in construction.
Overall, IJM remains a diversified play in Malaysia’s industrial space, with construction as its key driver, but prudent portfolio management is warranted given ongoing sectoral challenges.

Important Disclosures: This article is a summary of the UOB Kay Hian research report for informational purposes. Investors are advised to consult financial advisors for suitability before making investment decisions.