IJM Corp Bhd’s shareholders have approved the sale of the company’s entire 56.2% stake in IJM Plantations Bhd to Kuala Lumpur Kepong Bhd for RM1.53 billion in cash. The vote came at the annual general meeting on August 26.
In a statement the same day, IJM said the disposal fits its strategy of streamlining its construction, property, industry and infrastructure businesses. A leaner structure, it argued, should earn better value from the market and narrow the conglomerate discount.
Where the money goes
The company called the proceeds sizable. It listed new growth opportunities, existing working capital or capital expenditure needs, a special dividend and share buybacks as uses.
Of the total, RM800 million is earmarked for capital management. That includes an indicative special dividend of RM542 million, or 15 sen per share, which IJM had proposed earlier, plus a buyback program. The dividend declaration is expected to coincide with the release of second-quarter FY2022 results in November 2021.
IJM will book an immediate one-off gain on the sale in the quarter ended Sept 30, which it previously put at RM700 million.
The rest of the business
IJM said its construction, property, industry and infrastructure divisions should recover in the second half of FY2022, as operations restart. Looking at the economy and the competing demands on government finances, the group expects Private-Finance-Initiative style infrastructure spending to have to rise. “With a strong balance sheet, track record and experience in developing PFI projects, IJM will be well-placed to participate in a recovering economy,” it said.
The construction division’s outstanding order book stood at RM4 billion as of March 31, 2021. Since then it has won three projects worth RM586 million in FY2022 and aims to add RM2 billion to the order book this year. IJM said that target depends on infrastructure spending reviving under the Malaysian and Indian governments’ recovery plans.
IJM shares closed one sen, or 0.53%, higher at RM1.88 that day, valuing the group at RM6.71 billion.
Sources
- IJM Corp to dispose of 56.20 pct stake in IJM Plantations for RM1.53 bln
- IJM gets shareholders' nod to sell controlling stake in IJM Plantations to KLK for RM1.53b
Sources
- IJM Corp to dispose of 56.20 pct stake in IJM Plantations for RM1.53…
- IJM gets shareholders' nod to sell controlling stake in IJM Plantations…
