Fewer IJM property launches seen

IJM Corp Bhd, the country's second biggest builder, may cut down on planned property launches due to weak demand, CreditSuisse said in a report.

The report comes barely a month after IJM managing director Datuk Krishnan Tan Boon Seng said some projects in Selangor and Penang might be delayed as new state governments take charge.

Already the Selangor state government is considering scrapping some property joint ventures where companies linked to IJM, such as Talam Corp Bhd and Kumpulan Europlus (Keuro) Bhd, have been active participants.

IJM owns a quarter of Keuro, which in turn is the single largest stakeholder, owning some 42 per cent of Talam, once the country's biggest builder of low-cost houses.

Selangor Chief Minister Tan Sri Abdul Khalid Ibrahim said last week that some of the ventures don't have terms favourable to the state.

Business Times understands that Talam has several outstanding issues with Kumpulan Darul Ehsan Bhd's listed units, and is in talks to offset some claims on land in Kuala Langat and nearby areas.

Meanwhile, CreditSuisse expects IJM to halve the value of fresh property launches per annum.

"We are comfortable with our domestic sales assumptions of between RM500 million and RM700 million worth of property launches per annum," analyst Danny Goh wrote in a report based on a meeting with IJM's management.

However, IJM will still boost its order book to RM8 billion as it is in advance negotiations for some RM1.4 billion worth of projects abroad.

Locally, it is eyeing the RM500 million National Centre Institute project and some RM500 million worth of sub-contract work to help build a double tracking line.

IJM, which has seen a steep decline in foreign ownership to 47 per cent from a peak of 64 per cent, may also sell some of its mature property assets to keep its earnings momentum.

For the year ended March 31 2007, IJM posted a net profit of RM194.3 million versus RM160.4 million in the same period a year ago. - By Business Times

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