Hot Stocks IJM Land, IJM Corp seen active on privatisation exercise

by **Cals** Wed 11 Jun 2014, 01:53

Hot Stocks IJM Land, IJM Corp seen active on privatisation exercise

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Tuesday, 10 June 2014 11:33

KUALA LUMPUR (June 10): IJM Land Bhd and IJM Corporation Bhd were seen active in morning trades following the corporate exercise plans announced by the companies which involved the privatisation of IJM Land by its parent IJM Corp.

At 10.58 am today, IJM Land gained 29 sen or 9.2% to RM3.43. The third top gainer saw trades of some 4.5 million shares. It had earlier hit a high of RM3.50.

IJM Corp, however, remained flat at RM6.79 with 2.7 million shares done. Earlier, it had hit a high of RM6.90.

In a note, Kenanga Research said it was ‘positive’ on the privatisation as IJM Land had difficulties realising its value due to its illiquid shares, despite consensus unanimous recommendation for a ‘buy’ call on the stock.

Kenanga’s research analyst Sarah Lim said she raised her target price (TP) for IJM Land to RM3.55 from RM3.31, in line with the offer price of RM3.55.

“We are positive on the privatisation. As such, we raise our TP to RM3.55 and recommend investors to accept the offer,” she said.

Lim said the offer price of RM3.55 to acquire IJM Land is considered attractive against her earlier TP of RM3.31 and was at a 14.9% premium to its five-day volume weighted average price.

She said IJM Land had been extremely illiquid with its IJM Corp’s holding of 64.15% and given it was a highly institutionalised stock, making it relatively illiquid versus its peers.

Lim added the privatisation would enable IJM Land to gain a bigger balance sheet from its parent to grow more rapidly, as well as to resolve its related party transactions issues.

“It is worthwhile for IJM Land shareholders to own IJM Corp shares as they will be joining a bigger entity which enables IJMLAND to grow more aggressively,” she said.

Lim said she raised TP for IJM Corp to RM7.57 from RM6.83 and upgraded ‘outperform’ for the stock.

Meanwhile, Affin Investment Bank Research echoed its ‘positive’ stance on the privatisation exercise, adding it would enable investors to unlock the value in IJM Land with a lower liquidity risk.

“We see higher capital upside potential in IJM Corp compared to IJM Land,” said Affin IB analysts Ong Keng Wee and Isaac Chow.

“At our indicative post privatisation fair value of RM8.26 per IJM Corp share, the upside potential for IJM Land shareholders with the privatisation is 35.3% versus 18.8% without the exercise.”

The analysts said they maintained their ‘buy’ call for IJM Corp and IJM Land with an unchanged TP of RM8.55 and RM3.80 respectively.

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