IJM Corp: Has the market become too pessimistic on this blue-chip builder?

IJM Corporation Berhad now looks like one of those large-cap names where the market price may be telling a much weaker story than the underlying business. After Sunway’s takeover attempt lapsed, IJM’s share price fell back toward its pre-offer range, with the stock recently around RM2.31 to RM2.36. At those levels, IJM is being valued at only about 0.79 times book value, versus a reported net tangible asset of RM2.89 per share. On a simple asset basis alone, that already suggests the market is pricing IJM at a discount to what it owns.

The undervalue argument becomes even stronger when looking at the valuation work that surfaced during the takeover episode. IJM’s independent adviser said Sunway’s RM3.15 per share offer was “not fair and not reasonable”, noting that it represented a 46.1% to 51.4% discount to IJM’s estimated value based on a sum-of-parts method. News reports citing the adviser’s analysis put IJM’s estimated value at around RM5.84 to RM6.48 per share. In other words, even the rejected takeover offer was already viewed as materially below what IJM could be worth on a break-up or embedded-value basis.

That is why the current market level looks quite interesting. If the market is now pricing IJM back near RM2.30-plus, that is not only below the lapsed offer price of RM3.15, but also far below the value range indicated by the independent adviser. This does not automatically mean IJM should trade immediately at SOP value, because conglomerate and construction-linked stocks often trade at a holding-company discount. But it does raise a fair question: has the market swung too far back into pessimism after the takeover collapsed?

Fundamentally, IJM is also not a weak company. For the first nine months of FY2026, the group recorded RM5.01 billion in revenue, up 12.4% year-on-year, while pre-tax profit came in at RM354.2 million. The construction division remained a key driver, with revenue surging 53.7% to RM2.65 billion and pre-tax profit rising to RM114.4 million, supported by major industrial and data centre projects moving into active phases.

The order book still provides a useful earnings base as well. IJM said in August 2025 that its FY2026 outlook was supported by an outstanding construction order book of RM12.9 billion, along with RM1.7 billion in unbilled property sales. By February 2026, the group’s quarterly filing indicated that the construction division’s order book had risen further to RM15.3 billion, including IJM’s share of joint-venture and associate projects. That kind of order book gives the market visibility over the next few years and makes it harder to argue that IJM is some ex-growth contractor with no earnings runway.

There is also a broader value angle that should not be ignored. IJM is not a single-business stock. It has exposure across construction, property, manufacturing and quarrying, port operations, tolls, and investment holdings. That diversification is exactly why a sum-of-parts approach can show a much higher intrinsic value than what a simple market multiple might suggest. During the takeover debate, IJM itself argued that the group was in an “active value-creation phase” and that the value from order book quality, sector diversification, geographical expansion and strategic initiatives had yet to be fully reflected.

Another point in favour of the undervalue thesis is that even before the takeover saga, analysts were already arguing that IJM looked cheap. A report cited by The Edge in April 2025 said IJM was trading at about 14 times FY2026 earnings, below its own five-year mean PER of 15.7 times, and described that discount as unjustified given IJM’s position as a leading industrial builder. So the idea that IJM is being undervalued did not suddenly appear only because of Sunway’s offer, the market was already debating that gap earlier.

Of course, investors still need to stay realistic. IJM’s recent earnings were affected by lower contributions from some divisions and foreign-exchange movements, and the failed takeover may mean value crystallisation now takes longer than some investors had hoped. Construction and property counters also do not always rerate quickly, even when their assets look attractive on paper.

Still, from a fundamental and valuation angle, IJM now looks like a name where the market price, asset backing, order book strength and independent valuation work are not fully lining up. At around 0.79 times book, below the lapsed offer price, and far below the adviser’s SOP-based value range, IJM looks less like an overpriced blue chip and more like a counter where pessimism may have gone too far. For patient investors, that is usually where the undervalue case starts becoming more compelling.