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Friday, March 28, 2008

IJM may make 50 sen-a-share capital payout

IJM Corp Bhd, the country's second biggest builder, may soon declare a capital repayment, while its property unit is close to finalising as many as two en-bloc sales that could help boost profits, UBS Investment Research says in a report.

"We estimate a pending capital repayment of 50 sen a share and a recurring dividend of 15 sen a share," the investment house said, without disclosing the basis of its estimate.

In 2007, IJM paid a dividend of 15 sen a share, of which five sen a share was in the form of a special cash payment.

UBS also believes there is potential earnings upside from en-bloc property transactions from IJM's 65 per cent-owned property unit, IJM Land.

"According to management, it is finalising two en-bloc commercial transactions worth RM400 million. Our earnings estimates do not assume any en-bloc transactions.

"We estimate these two transactions could add RM70 to RM80 million to our financial year 2009 net profit forecast of RM446 million, if they go through," the UBS report said.

For the year ended March 31 2007, IJM recorded revenue of RM2.31 billion, a 39 per cent jump from before. Net income was up 21 per cent to RM194.3 million.

UBS' recommendation for IJM is unchanged, with a buy target up to RM10, but the company overall has received a mixed reaction from analysts this month.

From seven major research houses' reports, apart from UBS and Amresearch Sdn Bhd which have buy recommendations on the stock, JP Morgan, CLSA Asia Pacific, CIMB, RHB Research and Aseambankers are less optimistic on the outlook of the company.

However, apart from CLSA, which has a target price of RM5 a share for the counter, the rest of the research houses' targets vary from RM6.05 to RM10 a piece.

By New Straits Times (by Francis Fernandez)

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