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Tuesday, March 25, 2008

IJM: Builders to maintain profits

IJM Corp, Malaysia’s second-biggest builder, said the nation’s construction companies will be able to maintain profits for at least two years, dismissing concern that the government’s poll losses will slow spending on public works.

Opposition victories in five states won’t hamper IJM’s earnings, managing director Krishnan Tan told reporters today at an investor conference in Kuala Lumpur organised by the Malaysian stock exchange.

“It’s not peaking,” Tan said. “Awards may peak but jobs take two to three years to finish so one has to be clear that in terms of revenue spins, they’ll be on for two to three years.”

Shares of Malaysian builders including IJM have plunged on fears Prime Minister Datuk Seri Abdullah Ahmad Badawi’s spending plan for roads, bridges and ports may be delayed after the ruling coalition lost its two-third parliamentary majority. The Kuala Lumpur Construction Index has dropped 9.4 per cent since March 8.

“Most of the big construction companies already have substantial order books that will take them to two years of earnings,” Tan said. “If there’s a delay, it will be a delay in order-book enhancement. It shouldn’t affect the earnings in immediate terms.”

Many of the country’s large construction contracts have yet to be awarded, “so I don’t see how it can peak,” he said, referring to new orders.

By Bloomberg

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