KUALA LUMPUR: IJM Corp Bhd's first data centre (DC) construction contract win is a critical step for the company to penetrate a booming DC construction market, according to Hong Leong Investment Bank Bhd (HLIB).
IJM was awarded its first DC construction contract worth RM331.7 million, lifting its orderbook to RM7.3 billion.
HLIB said building on this base could unlock higher-value opportunities going forward in what appears to be a multi-year cycle.
"We expect the company to benefit from the coming stream of infrastructural projects in the second half of the calendar year 2024 (2HCY24)," it said.
"Case in point, IJM's current client, Telekom Malaysia Bhd, has recently entered into a joint venture (JV) to develop a DC with an initial capacity of 64 megawatts (MW) and an ultimate capacity of 200 MW," it said.
Meanwhile, HLIB said IJM's pathway towards its RM5 billion replenishment target looks on track.
Projects in the pipeline that the firm thinks sufficiently take IJM are the New Pantai Expressway (NPE) 2.0, Nusantara PFI (government housing), and more data center projects.
"Other projects that we think augment its job prospects are Indian highways and industrial buildings, not to mention upcoming infrastructure projects such as Penang LRT, Kuching Urban Transportation System (KUTS), Johor infrastructural upgrades, and road opportunities in East Malaysia.
"All in, no change to forecasts. (We) maintain a buy rating with an unchanged target price of RM3.50," it added.
