AmInvest Research Reports

Stock Idea - Inta Bina Group

Publish date: Thu, 16 May 2024, 10:42 AM
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Company Background. Inta Bina Group (INTA) is a CIDB-recognised G7 building contractor with over 30 years of operating history in the construction industry in Malaysia. It operates under 2 main business divisions: (i) Residential (77% of FY23 revenue), and (ii) Non-Residential (21% of FY23 revenue). INTA has completed more than 149 construction projects worth RM4.1bil, mainly in the Klang Valley and Johor regions. The group is experienced in building various types of buildings, including high-rise residential, landed, commercial, industrial and leisure properties.

Prospects. (i) Focusing on replenishing and expanding its order book. As at 31 Dec 2023, the unbilled order book for ongoing projects totalled RM1bil, sustaining its revenue and earnings for the next 2-3 years, (ii) Superior workmanship is demonstrated by its projects consistently exceeding the 75% benchmarks for both CONQUAS and QLASSIC, achieving top scores of 83.5% and 90% respectively. This high level of craftsmanship has enabled it to build lasting partnerships with leading property developers such as Gamuda, EcoWorld, Sunway and Mah Sing, and (iii) With a focus on residential construction, the group is optimistic that government initiatives such as iMILIKI, the Housing Credit Guarantee Scheme and the Madani Neighbourhood Schemes will boost residential demand.

Financial Performance. In FY23, INTA posted a higher revenue of RM650mil (+39% YoY) with a PAT of RM22.9mil (+2.4x YoY). This was mainly due to higher recognition of progress billings from ongoing & new projects, improvement in gross profit margin, successful cost rationalisation initiatives and a reduction in net impairment loss on financial instruments.

Valuation. INTA is currently trading at an attractive FY24F P/E of 9x, which is lower than Bursa Construction Index’s 5-year forward average of 17.3x. As a comparison, GDB Holdings and Nestcon, both also involved in building/construction services, trade at much higher trailing P/Es of 36x and 64x respectively.

Technical Analysis. INTA may trend higher after it formed a long positive candle and hit a new multi-year high a week ago. The stock’s move above the key RM0.40 resistance coupled with rising EMAs indicate that the near term upward momentum may persist. A bullish bias may emerge above the RM0.40 level with stop-loss set at RM0.36, below the 50-day EMA. Towards the upside, nearterm resistance level is seen at RM0.50, followed by RM0.60.

Source: AmInvest Research - 16 May 2024

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