· IJM has secured a RM1.23bn design-and-build contract from AT&S to build a semiconductor manufacturing facility in Kulim Hi-Tech Park, Kedah.
· The contract accounts for c.12% of IJM Construction's outstanding order book and is expected to contribute from FY27, with the bulk recognised in FY28 given its c.14-month tenure.
· This latest win lifts IJM's FY27 new contract wins to c.RM2.8bn and IJM Construction's outstanding order book to c.RM10.6bn.
· Maintain BUY with an unchenged TP of RM3.48, based on a sum-of-parts valuation, alongside a three-star ESG rating.
Secured RM1.23bn Design-and-Build Contract. IJM's wholly-owned subsidiary, IJM Construction Sdn Bhd, has accepted a letter of award from AT&S Austria Technologie & Systemtechnik (Malaysia) Sdn Bhd (AT&S) for the Manufacturing Facilities Construction Project in Kulim Hi-Tech Park, Kedah, for a contract sum of approximately RM1.23bn. The integrated scope covers design development, procurement, construction, testing and commissioning of the facility, including civil, structural and architectural works, M&E systems, cleanroom and process utilities, and supporting infrastructure. The development comprises a 4-storey production building, a 3-storey central utility building, water and wastewater infrastructure, and external works. IBS precast components will be used, and the production building is targeted to achieve LEED Gold certification. Works are scheduled to commence in 4Q2026 and complete in 4Q2027.
Our View. We view this contract win positively, as it is sizeable, fast-tracked and further deepens IJM's footprint in high-tech manufacturing facilities. The RM1.23bn contract represents c.12% of IJM Construction's outstanding order book of c.RM10.6bn and c.41% of its FY27 new contract wins to date of c.RM. With works running from 4Q2026 to 4Q2027 (3QFY27 to 3QFY28), we expect only a modest contribution in FY27, with the bulk of recognition in FY28. The implied average billing of c.RM88m per month is demanding, but IJM has a solid record in fast-track advanced industrial builds, including the RM455m semiconductor ASRS warehouse in Kulim and the RM454.5m Intuitive Surgical manufacturing facility in Batu Kawan secured in August 2026, while its IBS precast capabilities should help support delivery certainty. The client is a strong anchor: AT&S, an Austrian maker of IC substrates and high-end printed circuit boards, announced in June 2026 a EUR1.5-2.0bn expansion of its Kulim site backed by long-term agreements with AMD and another technology customer, which we believe could lead to follow-on packages for IJM. That said, the integrated design-and-build scope, which includes cleanroom and process utilities, carries higher cost-overrun risk, and the compressed timeline leaves little room for delays in specialist M&E works.
Outlook. This latest award lifts IJM Construction's FY27 new contract wins to c.RM2.8bn, or c.47% of management's FY27 Malaysian new-order target of RM6.0bn (total FY27 target of RM9.0bn, including RM3.0bn overseas). IJM Construction's outstanding order book now stands at c.RM10.6bn (Malaysia and Singapore), translating to a book-to-bill ratio of approximately 3.0x based on FY26 Construction revenue. With a tender book of c.RM18bn and advanced industrial and data centre work already making up c.55% of the Malaysian order book, we expect data centre, semiconductor and other high-tech manufacturing jobs to continue driving replenishment. Coupled with the Value Realisation Programme, including the proposed IJM Construction listing targeted for 3Q2027, we believe IJM is well positioned for a sustained earnings recovery.
Earnings Revision. Following this new contract award, IJM's FY27 order book replenishment of c.RM2.8bn has accounted for 35% of our RM8.0bn assumption. We maintain our FY27-FY29 order book replenishment assumptions at RM8.0bn per annum, as the contract is within our expectations. Consequently, our earnings forecasts for FY27F/FY28F/FY29F are unchanged at RM555.1m/RM668.5m/RM572.2m, respectively.
Valuation & Recommendation. We maintain our BUY recommendation on IJM with an unchanged TP of RM3.48, based on a sum-of-parts valuation that applies a 22.0x PE to FY27F Construction core net profit, a 20.0x PE to Manufacturing & Quarrying and Port (60% attributable), DCF for toll concessions, a 50% discount to RNAV for Property, and market value for listed associate stakes, alongside a three-star ESG rating.
Risks. Rising material pricing, FX volatility, property overhang, and execution risk on Value Realisation Programme.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.067843 | 4.098409 |
| EUR | 4.563934 | 4.566371 |
| CNY | 0.609759 | 0.610082 |
| HKD | 0.518586 | 0.521970 |
| SGD | 3.177758 | 3.198571 |