IJM Corp, Malaysia's second-biggest builder by market value, is considering taking some of its highway and port concessions public to boost the value of its stock, said chief executive officer Datuk Teh Kean Ming.
IJM is considering a straight listing of its assets or an initial public offering as a business trust, Teh said in an interview in Kuala Lumpur yesterday. The Selangor-based company may also look at selling stakes to private equity firms or strategic investors, he said, without providing a time frame.
"We have intentions to monetize the value of some of more mature route concessions in Malaysia," Teh said. "It is a bit early to say which vehicle we might use. We have assets which we think are very valuable, but the investing fraternity have not given us a value."
IJM sold its 36 per cent stake in the Trichy Tollway in India for a profit of about RM50 million in March, and disposed 40 per cent of its equity interest in Kuantan Port to China's Guangxi Beibu Gulf International Port Group, according to the company.
The infrastructure business contributed to about 10 per cent of total revenue in the last financial year ended March 31, according to data compiled by Bloomberg. The diversified group last year agreed to become the biggest shareholder in oil and gas services provider Scomi Group Bhd, adding to its portfolio of plantations and property assets.
IJM's shares have gained 14 per cent this year, outperforming the benchmark FTSE Bursa Malaysia KLCI Index's 5.3 per cent advance.
About 75 per cent of IJM's debt is in concession assets, which is non-recourse, said Teh. Total debt was at RM2.86 billion, according to data compiled by Bloomberg.
IJM will see most of its earnings growth coming from the property segment in the near-term on strong sales and demand, Teh said. The construction of a mixed development in the northern state of Penang has attracted potential partners to operate hotels, a shopping outlet and a convention center, and the company may later list the commercial property element of the project as a real estate investment trust, he said.
IJM will continue to focus on boosting palm oil production by improving yields, said Teh. Last month, futures on the benchmark Bursa Malaysia Derivatives dropped to the lowest level since October 2009 on expectations that global supply will beat demand. India and China are the biggest consumers of the tropical oil.
"The overall picture is still based on demand," said Teh. "This financial year will be a bit tough, a challenge for us, but going forward, when the US economy, and India and China are back on track, demand will come back."-- Bloomberg
Let's all of us wait & see. Straight listing or M'sia 1st Business Trust Listing