Ibraco a beneficiary of Sarawak’s infra boom

KUCHING (July 9): As a Class A Contractor certified with ISO 9001:2008, developer Ibraco Bhd (Ibraco) stands to gain from Sarawak’s strong medium to long-term economic prospects as well as its infrastructure boom.

Ibraco has a landbank of 733 acres across Kuching, Bintulu and the Klang Valley with a collective gross development value (GDV) of RM5.6 billion.

Analysts at TA Investment Bank Bhd (TA Research) estimated Ibraco’s net profit to increase at a five-year cumulative annual growth rate of 24.2 per cent to RM69.5 million, supported by unbilled sales of RM209 million and an outstanding construction order book of RM1.2 billion.

For financial year 2024 (FY24), management is setting its sights on achieving new sales of RM400 million, bolstered by planned launches worth RM1.6 billion.

However, TA Research viewed this sales target as rather conservative, given the robust demand for properties and the substantial pipeline of new launches.

“With a strong track record in diverse infrastructure projects, Ibraco is well positioned as Sarawak undertakes extensive infrastructure spending to become a developed state by 2030.

“The potential for new projects in Sarawak is abundant for the upcoming years and considering Ibraco’s capabilities, we expect the group to participate in tenders for airport expansion works in Sibu, Miri, and Kuching, a proposed new airport in Lawas.

“We also expect Ibraco to participate in tenders for the water supply grid programmes; the 30km KUTS Green Line connecting Pending and Damai; and green hydrogen production plants and supporting facilities.”

To mitigate the impact of raw material price fluctuations on its core property and construction divisions, Ibraco has strategically entered the supply chain of essential building materials.

Starting with the quarry business in 2019, followed by steel pipe manufacturing in early 2022, the group expanded into ready-mix concrete manufacturing in late 2022.

These diversifications aim to create a self-sustaining supply chain, enhance long-term earnings, and ensure quality control for building materials.

“Our target price for Ibraco is RM1.33 per share,” TA Research said, maintaining its buy call on the Sarawakian firm. “Although our target valuations for Ibraco’s property and construction exceed those of its small-cap peers in the respective sectors, we believe it is justified.

“This is attributed to Ibraco’s entrenched position in Sarawak, which has enabled it to garner strong property sales and secure construction projects with above-average profit margins.

“Meanwhile, the quarry and other divisions are valued at 10 times 2025 earnings.”