KUALA LUMPUR: IJM Corp Bhd's shares on Bursa Malaysia surged this morning following the announcement of a RM331.7 million data centre (DC) construction contract.
By 11.50 am, its shares had risen by 2.69 per cent or eight sen, to RM3.05 with 5.39 million shares traded.
IJM Corp's wholly-owned unit, IJM Construction Sdn Bhd, secured the contract to design and build Block 2 of the Iskandar Puteri Data Centre in Johor from TM Technology Services Sdn Bhd, a subsidiary of Telekom Malaysia Bhd.
Construction is set to commence in July 2024, aiming for completion by the third quarter of 2025.
HongLeong Investment Bank (HLIB) Research highlighted that the DC contract brings IJM Corp's year-to-date wins for financial year 2025 to RM1.3 billion, bolstering its construction order book to RM7.3 billion.
"While the DC contract's value is relatively modest, it marks a significant move for IJM into the burgeoning DC construction market, where a substantial 2.8 gigawatt capacity remains in the pre-construction phase.
"Building on this base could unlock higher-value opportunities in what appears to be a multi-year growth cycle," it said in a research note today.
Consequently, the firm reiterated a "buy" rating on IJM Corp, maintaining an unchanged target price (TP) of RM3.50.
Echoing sentiments, Kenanga Research also affirmed a "market perform" recommendation with a TP of RM3, citing IJM Corp's potential involvement in upcoming major rail projects such as the Mass Rapid Transit Line 3 (MRT3) and Bayan Lepas Light Rail Transit (LRT), building on its experience from previous MRT and LRT projects.
"We continue to like IJM Corp due to its strong earnings visibility, supported by an impressive construction order book and new property sales.
"Besides, Kuantan Port's position as the largest port on the East Coast also captures growth in export and import activities," it added.