Tuesday, Nov 12, 2002
IJM Corporation Berhad’s (IJM) corporate debt rating has been reaffirmed at A reflecting the group’s competitive position as a reputable infrastructure construction company; its geographical diversity; and relatively strong financial profile. The rating is somehow moderated by the cyclical nature of the construction industry and the increased political and economic risks associated with the group’s infrastructure ventures in emerging markets.
IJM is one of the largest and most diversified construction groups in the country with a cumulative experience of over 30 years in the industry. IJM’s activities range from construction, property development, manufacturing and quarrying to plantations and international ventures. Slightly more than half of the group’s revenue of RM857.4 million as at end December 2001 was contributed by construction contracts. Contribution from construction activities is expected to increase in the current fiscal year, sustained by the healthy outstanding order book, which as at July 2002 stood at RM1.6 billion. IJM’s capability to undertake the whole spectrum of construction works; established track record of quality work and timely completion; and significant financial capacity to undertake large projects provides it with an edge in the intensely competitive construction industry. The main construction projects completed during the year 2001 included the PTP Rail Link, Phase 3 Riana Green condominiums and KL Monorail (Package B).
IJM’s increasing participation in infrastructure/construction projects overseas has helped to cushion its earnings from the effects of the difficult economic condition in the domestic market. IJM is one of the major players in the Indian construction market. To date, it has completed five projects worth over RM191 million with four more projects under implementation worth RM392 million in that subcontinent. In 2001, IJM realized part of its investment in Guangdong Provincial Expressway Development Co. Ltd. (“GPED”) for a total cash consideration of RM249.18 million, resulting in an exceptional gain of RM122.26 million at the group level. The group, however, had to make a RM47 million provision in respect of its investment in Argentina following the devaluation of the peso as a result of the severe economic crisis in that country. Going forward, MARC expects overseas earnings from IJM’s already operational infrastructure-related concessions to remain significant.
Manufacturing activities ranked second in contribution towards the group’s operating revenue as at end December 2001; supported by the group’s steel engineering arm, Torsco Bhd, and quarrying operations. The group plans to float its plantation unit, IJM Plantations Sdn Bhd (IJMP) by FY2003. Future contribution from the plantation segment will consequently be limited to the equity-accounted profits in IJMP. The group’s property development activities are mainly concentrated in densely populated areas, such as Penang, Butterworth, Ipoh and the Klang Valley; with revenue contribution increasing by nearly two-fold to RM135.2 million in FY2001.
IJM’s financial profile strengthened further reflecting the improved performance of its main businesses. The exceptional gain from the disposal of part of the group’s equity stake in GPED helped to lift the group’s pre-tax profit by 77% to RM210.4 million as at year end 2001. The utilization of part of the disposal proceeds for the partial settlement of some of its foreign currency borrowings helped to reduce the group’s debt leverage to 0.25 times from 0.38 times in FY2000. Going forward, the group’s debt levels are expected to remain within manageable levels, providing the group with significant capacity to undertake new projects/ventures. Cash flow protection measures improved in FY2001, aided by the collection of receivables, lower interest expenses and the lower debt levels.
IJM is one of the largest and most diversified construction groups in the country with a cumulative experience of over 30 years in the industry. IJM’s activities range from construction, property development, manufacturing and quarrying to plantations and international ventures. Slightly more than half of the group’s revenue of RM857.4 million as at end December 2001 was contributed by construction contracts. Contribution from construction activities is expected to increase in the current fiscal year, sustained by the healthy outstanding order book, which as at July 2002 stood at RM1.6 billion. IJM’s capability to undertake the whole spectrum of construction works; established track record of quality work and timely completion; and significant financial capacity to undertake large projects provides it with an edge in the intensely competitive construction industry. The main construction projects completed during the year 2001 included the PTP Rail Link, Phase 3 Riana Green condominiums and KL Monorail (Package B).
IJM’s increasing participation in infrastructure/construction projects overseas has helped to cushion its earnings from the effects of the difficult economic condition in the domestic market. IJM is one of the major players in the Indian construction market. To date, it has completed five projects worth over RM191 million with four more projects under implementation worth RM392 million in that subcontinent. In 2001, IJM realized part of its investment in Guangdong Provincial Expressway Development Co. Ltd. (“GPED”) for a total cash consideration of RM249.18 million, resulting in an exceptional gain of RM122.26 million at the group level. The group, however, had to make a RM47 million provision in respect of its investment in Argentina following the devaluation of the peso as a result of the severe economic crisis in that country. Going forward, MARC expects overseas earnings from IJM’s already operational infrastructure-related concessions to remain significant.
Manufacturing activities ranked second in contribution towards the group’s operating revenue as at end December 2001; supported by the group’s steel engineering arm, Torsco Bhd, and quarrying operations. The group plans to float its plantation unit, IJM Plantations Sdn Bhd (IJMP) by FY2003. Future contribution from the plantation segment will consequently be limited to the equity-accounted profits in IJMP. The group’s property development activities are mainly concentrated in densely populated areas, such as Penang, Butterworth, Ipoh and the Klang Valley; with revenue contribution increasing by nearly two-fold to RM135.2 million in FY2001.
IJM’s financial profile strengthened further reflecting the improved performance of its main businesses. The exceptional gain from the disposal of part of the group’s equity stake in GPED helped to lift the group’s pre-tax profit by 77% to RM210.4 million as at year end 2001. The utilization of part of the disposal proceeds for the partial settlement of some of its foreign currency borrowings helped to reduce the group’s debt leverage to 0.25 times from 0.38 times in FY2000. Going forward, the group’s debt levels are expected to remain within manageable levels, providing the group with significant capacity to undertake new projects/ventures. Cash flow protection measures improved in FY2001, aided by the collection of receivables, lower interest expenses and the lower debt levels.