IJM Corporation Berhad’s (IJM) proposed RM300 million of Commercial Papers/ Medium Term Notes Programme (CP/MTN) has been assigned a long term rating of A+ and a short term rating of MARC-1. This reflects its consistently strong financial results, the ability to sustain its competitive position domestically and internationally and the diversity of its business. Moderating factors include the increasing competitiveness in the domestic construction environment compounded by the difficult building materials industry, and the inherent risk in each business segment in which it operates.

IJM has five main divisions; namely construction, properties, manufacturing and quarrying, plantation and infrastructure projects. However, its strength lies in its construction division, being one of the stronger construction companies in the industry. Despite the weakened sentiment in the domestic construction industry, IJM’s outstanding order book stood at RM2.50 billion as at June 2004 of which 87% are domestic contracts. For FY2003, the division’s construction revenue increased to RM961.5 million from RM953.8 million in the previous financial year. The group’s construction business is supported by its firm footing in the Indian construction industry. Although IJM’s intensive management of projects has helped mitigate the impact of the rising building materials prices on the group, it is cautious on the effects of the developments in the building materials industry on the progress of its projects.

The group’s property development division has improved significantly in the past four years, currently being the second highest contributor to the group’s bottom line. This is due to the improved performance of its properties in Penang, Klang Valley, Negeri Sembilan, Johor and Sandakan as well as the sale of non-strategic land. Going forward, gross development value to be launched between 2004 and 2005 amounts to RM1.01 billion. IJM has also made headway in India’s property development market with its maiden project, Raintree Park – Kukatpally, a range of low to high end housing development; which has recorded good response with 90% take up rate upon its first launching.

Despite operating in a difficult environment, IJM’s manufacturing and quarrying division managed to show improvement with its pre-tax profit improving significantly to RM20.9 million in FY2003 from RM8.3 million in FY2002. This was due to better performance from the quarries and ready-to-mix concrete operations.

The plantation division through IJM Plantations Berhad has benefited from the strong CPO price during the latest financial year. For FY2003, the division was still able to contribute RM74.5 million in revenue despite becoming an associate company in July 2003 as compared to RM96.8 million in FY2002.

IJM’s off-shore ventures’ contribution is expected to improve with the completion of Swarna Tollway in India, in which IJM has a 35% stake, and the expected commencement of tolling in 2004. IJM also has stakes in other ventures in China, Argentina, Vietnam and Chile. The geographical diversity, however, exposes IJM to political and local currency risks in the countries in which it operates.

IJM’s financial profile remained strong with stable margins, low debt leverage and good debt servicing capacity. Pro-forma debt-to-equity ratio after the issuance of this new facility is 0.39 times.