IJM, another attractive BUY

IJM has been sliding since making a high of RM9.50 (in February 2007). Yesterday, IJM made a low of RM2.35 before staging a slow recovery to close at RM2.45. The share price has plunged 60% over the past 4 days, from its close of RM4.14 on October 22nd. One of the possible reason for the selldown is the unhappiness among its financiers over IJM's proposed special dividend of 25 sen as well as capital repayment of RM0.50 per share (go here). These capital management exercise may have come at a bad time when companies worldwide are conserving cash or making right issues if possible in order to ride through the different time ahead.

IJM is now trading at a P/Book of 0.5 times or 8.9 times its annualized earning for FY2008 (of 28 sen). IJM's financial position is fairly healthy, with current ratio at 1.8 times while gearing ratio is moderate at 0.59 times (based on its Balance Sheet as at 30/6/2008). Its cash in hand is very high at RM717 million, but would be lowered by RM645 million after the proposed special dividend & capital repayment exercise. The entitlement date for the special dividend was yesterday.


Chart: IJM's weekly chart as at October 29, 2008 (source: Quickcharts)

Based on the huge drop in share price, I believe that IJM is now an attractive stock for long-term investment.