At 11.35am, IJM’s share price rose by two sen to RM1.49 with 1.6 million shares traded. ― Bernama pic
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Tuesday, 25 Jul 2023 12:08 PM MYT
KUALA LUMPUR, July 25 — IJM Corporation Bhd’s share price rose in the early trade today, following news that the company has entered into a conditional subscription agreement on the proposed subscription of 44.83 per cent stake in Pestech International Bhd for RM124 million.
At 11.35am, IJM’s share price rose by two sen to RM1.49 with 1.6 million shares traded.
In a Bursa filing yesterday, IJM said upon completion of the proposed subscription, its shareholding in the enlarged share capital of Pestech stood at 44.83 per cent, excluding treasury shares.
In a note, RHB Research maintained its ’neutral’ rating on the construction and engineering company, with a target price of RM1.59.
It said 68 per cent of the proceeds from IJM’s subscription will be utilised for immediate day-to-day working capital requirements for Pestech’s projects, such as the upgrading of the Kuala Lumpur International Airport’s Aerotrain and the Electricite du Cambodge project in Cambodia.
“Pestech will use 24 per cent of the proceeds to repay borrowings and reduce its net gearing ratio of 1.30 times (as of end-financial year 2022 (FY2022)) to 1.16 times, based on the enlarged share capital post subscription; thus ensuring that its debt levels remain manageable.
“Based on our preliminary estimates, IJM’s subscription may help Pestech to break even at a faster pace likely by FY2026/FY2027 and narrow its annual losses,” it added. — Bernama
