Excluding all these non-recurring transactions and unrealised foreign exchange fluctuations, IJM Corp’s core pre-tax profit would only have been 5.5% lower at RM1.03 billion in FY2015 compared with RM1.09 billion the year before, chairman Tan Sri Abdul Halim Ali says in the group’s 2015 annual report.

Yet, IJM Corp managed to weather the storm last year and outperform its peers in the construction industry. Its pre-tax profit grew at a compound annual growth rate of 8.34% from FY2012 to FY2015.

Significantly, FY2015 was the second consecutive year in which IJM Corp’s core pre-tax profit exceeded the RM1 billion mark — thanks to the diversified revenue base that the group has built over the years.

While property development and infrastructure earnings took a dive in FY2015, IJM Corp’s bottom line was buffered by the less severe losses in its construction, manufacturing and quarrying, and plantations businesses.

The pre-tax profit of its property division fell 34% to RM494.66 million in FY2015 from the preceding year, which saw one-off gains, including a revaluation gain of RM222.7 million on its stake in Bandar Rimbayu. Its infrastructure division, meanwhile, posted a sharply lower — down 77.6% — pre-tax profit of RM21.27 million.

The division that brought in higher year-on-year revenue was construction. It also saw higher investment income of RM82.56 million compared with RM55.05 million the year before. Pre-tax earnings gained some 10% to RM184.84 million despite a 41% dive in revenue to RM1.224 billion.

By division, IJM Corp’s property development business contributed the lion’s share — 37% — to total group revenue in FY2015. This was followed by construction (20%), infrastructure concessions (17%), manufacturing and quarrying (15%) and plantations (11%).

Apart from diversity in its core businesses, the group also has operations in different markets outside Malaysia. For example, it has property development projects in London and China; investments in major infrastructure projects in Argentina, India and Vietnam; and is expanding its oil palm plantations in Indonesia.

Many of IJM Corp’s core businesses seem to have recovered, particularly its core construction segment.

CIMB Research points out that IJM Corp’s construction division just closed its financial year ended March 31, 2016 (FY2016), with a record order book of over RM8 billion, beating the previous record high of RM7 billion for FY2015. This includes the recent RM1.5 billion northern portal viaduct package that the group won for the Mass Rapid Transit 2 (MRT2) project.

According to CIMB, the MRT2 package’s margins are expected to be more lucrative than those of the MRT1 package — estimated at about 4% to 5% — which IJM Corp won in 2012. “Construction earnings visibility is good for FY2017, which should offset the challenges the property division is facing in the light of the soft domestic environment,” the research house says in a recent note.

However, CIMB notes that IJM Corp’s property arm, IJM Land Bhd, is still going ahead with the launch of RM1.5 billion worth of projects in its financial year ending March 31, 2017. This is despite the current weakness in the domestic property market.

“With a record construction order book, execution and acceleration of billings are key. The only downside risks in the medium term are likely to be the property development and plantation divisions,” says CIMB, whose target price of RM4.09 implied a 19% upside for the stock at the time of writing.