Ikhmas Jaya gains 3% after piling contract win

KUALA LUMPUR (April 17): Ikhmas Jaya Group Bhd gained 3.23% during the mid-morning session, after the company last Friday announced a contract win worth RM33.8 million.

At 11.33am, Ikhmas rose 2 sen or 3.23% to trade at a high of 64 sen, with a total of 437,800 shares exchanged.

Last Friday, the company said it had accepted the terms and conditions of a letter of intent from Jack-(In) Pile (M) Sdn Bhd for the construction and completion of piling and substructure works for a shop-office home-office (SoHo) project in Shah Alam, Selangor.

The contract is for a period of 12 months, tentatively commencing on April 15, 2017.

In a note today, JF Apex Securities Research said the new win brings Ikhmas Jaya's orderbook to RM573.8 million, providing an earnings visibility of 1.82 times the company's FY15 earnings, assuming a net profit margin of 8%.

"The group has successfully replenished its orderbook by RM71.5 million year to date, accounting for 17.9% of our RM400 million estimated target orderbook for FY17," it said.

The research house said it expects earnings from the job to kick in starting late FY17.

JF Apex maintained its "buy" call on the stock, with a target price of 76 sen.

"We believe the group will resume its growth trajectory in FY17 given more construction works in the pipeline, especially under the government's initiatives such as the Economic Transformation Plan (ETP), transit-oriented developments (TODs) and the Corridor and City Transformation Programmes that would render job opportunities to Ikhmas Jaya," said the research house. — theedgemarkets.com

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