IJM Corp Bhd is projected to experience stronger earnings and improved capital returns in the coming years, driven largely by a recovery phase that began following the financial year 2026 (FY26) earnings trough. The company's prospects are further supported by an enhancement in construction earnings quality and the launch of a RM3 billion value-realisation programme, according to analysis from BIMB Securities Research.

BIMB Securities’ initiation of coverage on IJM highlights several key growth drivers, including the proposed listing of IJM’s construction arm and ongoing asset monetisation efforts. These initiatives are expected to help reduce the conglomerate discount that has historically weighed on the group’s valuation. The research firm identified FY26 as a bottoming year, with earnings recovery becoming evident from the first quarter of FY27 (1Q27). Additionally, the group’s industrial projects pipeline is anticipated to boost construction growth, accelerate project execution, and improve profit margins.

A central component of IJM’s planned re-rating is its three-year RM3 billion shareholder distribution strategy. The group has already sold 142.4 million treasury shares for RM385 million and declared a 10-sen special dividend. The largest element of the distribution plan is the intended listing of IJM’s Malaysian and Singapore construction operations in the third quarter of FY27, expected to generate an indicative RM1.2 billion in proceeds. Additional funds are anticipated from toll road asset monetisation and the group’s planned exit from India.

Investor relations efforts have intensified, with IJM conducting quarterly briefings, a notable increase from the previous semiannual engagement schedule. The construction division has strengthened with an order book valued at RM14.5 billion, providing revenue coverage of roughly 4.1 times the FY26 construction revenue. The order book is increasingly weighted toward higher-value industrial buildings, including data centres, semiconductor plants, and advanced manufacturing facilities, which typically offer shorter delivery schedules and improved margins compared to traditional infrastructure projects.

Despite a challenging year for its property division in FY26, largely due to weaker sales, the absence of significant land-sale revenue from Penang recognised in FY25, higher operating costs in Malaysia and the UK, foreign exchange losses, and inventory impairments, property remains a core business pillar. IJM is reportedly transitioning away from expansive township developments, shifting focus to a more selective portfolio consisting of residential, commercial, and investment properties. The group is also rationalising its overseas holdings, notably in India, while pursuing longer-term opportunities in the UK through joint ventures related to the rail sector.

IJM’s industry division remains one of the group’s most stable operations and is increasingly aligned with the structural growth themes benefiting its construction activities. The company’s infrastructure portfolio includes toll road concessions such as the mature Sungai Besi Expressway and Kajang-Seremban Highway, alongside exposure to the West Coast Expressway and international assets. These infrastructure assets generate recurring cash flow, although reported earnings are subject to variations due to factors like amortisation, financing expenses, traffic volumes, and currency fluctuations.

Kuantan Port, in which IJM holds a 60% stake, experienced reduced cargo throughput in FY26, declining from approximately 24.3 million tonnes in FY25 to 20.6 million tonnes, primarily due to major maintenance by its key customer, Alliance Steel. This affected the port’s revenue and profitability; however, the infrastructure and customer base remain solid.

BIMB Securities has assigned a “buy” rating to IJM Corp with a target price of RM3.47, reflecting a potential upside of 22.2% alongside attractive dividend yields.