Analysts say Ibraco has capability to build Mukah airport

PETALING JAYA: Analysts are confident that Ibraco Bhd is capable of undertaking the Mukah airport construction job, despite this being the first such job for the group.

TA Securities said Ibraco’s construction division, which was established in 2002, has the ability to carry out earthwork, civil, building and structural works for residential, commercial and industrial projects.

“It is also able to provide project management services ranging from feasibility studies, master planning, conceptual and detailed design, project management including contract administration and supervision,” it noted.

On Monday, Ibraco announced that it was awarded a RM302.64 million contract for the construction of an airport in Mukah, a plan that was mooted in 2009.

Overall, TA Securities said it is positive on the contract win as it will diversify the group’s earnings.

While the margin is expected to be lower as compared with property development, HLIB Research said the contribution to absolute earnings is expected to be significant.

HLIB Research said Ibraco has the capacity to take on construction works of up to RM1 billion.

TA Securities has revised Ibraco’s target price higher to RM1 from 92 sen previously, upgrading its “hold” call to a “buy”. The research house said Ibraco’s future earnings are now further anchored by its RM302.6 million outstanding construction orderbook in addition to the RM303 million of unbilled property sales as at March 2017.

HLIB Research is maintaining a “buy” call on the group, underpinned by strong three-year earnings compound annual growth rate (CAGR) of 42% and healthy unbilled sales of 1.9 times, supported by above industry average margin and attractive dividend yield at 4.2%. The target price is also raised from 97 sen to RM1.

Ibraco’s share price closed three sen or 3.41% higher to 91 sen on some 120,200 shares traded, giving it a market capitalisation of RM451.73 million.