IJM Corp Bhd (June 11, RM5.25)
BUY: IJM entered into a shareholders’ agreement with Mega First Corp Bhd to form a 30:70 joint venture company (JVC) for the purpose of investing into a project company which will be incorporated in the Lao People’s Democratic Republic (Lao PDR). The JVC is to undertake the development and operation of the Don Sahong hydropower project in the Lao PDR, with an initial equity capital of US$10,000 (about RM33,000).
Mega First had entered into a project development agreement with the Lao PDR government on Feb 13, 2008 to develop and operate the Don Sahong hydropower project on a build, own, operate and transfer basis. The proposed project has the capability to generate between 240mw and 360mw of electricity, which will be sold to Lao PDR and neighbouring countries. The JVC will invest in a special purpose vehicle, which will be established to build, own and operate the Don Sahong hydropower project for a 30-year concession period. Commercial operation is targeted for 2013 but no later than 2015. We have not revised our earnings estimate pending further negotiations with the Lao PDR government. Nevertheless, we reiterate our “buy” call with unchanged target price of RM8.15. — ECM Libra (June 11)