Results Update

Integra has just announced its results for QE30/6/2010. Its net profit increased by 54% q-o-q or 51% y-o-y to RM13.7 million while its turnover was up 2% q-o-q or 10% y-o-y to RM23.5 million. The improved performance was attributable to increased cargo throughput in its 2 ports off Lumut as well as its 20%-owned associate, PGMC due to higher shipment of nickel.


Table: Integra's 8 quarterly results


Chart 1: Integra's last 13 quarterly results

It's worth noting that PGMC's shipment of nickel ore jumped from 4 shipments of 128,363 DMT in QE31/3/2010 to 27 shipments of 873,739 DMT in QE30/6/2010. At this current rate, PGMC may ship out more nickel ore in 2010 as compared to total shipment of 1,227,221 DMT recorded in 2009. Prices of nickel is still way off its high of USD54,000 in 2007 but it has recovered substantially from the low of USD10,000 in early 2009.


Chart 2: Nickel's monthly prices

Valuation

Integra (closed at RM1.24 yesterday) is now trading at a PER of 8.8 times (based on the last 4 quarters' EPS of 14.12 sen). At this multiple, Integra is deemed attractive. It may trade up to a PER of 10 times, giving te stock a fair value of RM1.41.

Technical Outlook

Integra is in an uptrend line, with support at RM1.10. A parallel line can be drawn and it may mark the resistance level for the stock at RM1.40. See Chart 2 below.


Chart 3: Integra's daily chart as at Aug 26, 2010 (Source: Quickcharts)

From the monthly chart (plotted on logarithmic scale), we can see that Integra seems to move in cycles (or waves) . It may be on the crest of its present cycle, with limited upside.


Chart 3: Integra's monthly chart as at Aug 25, 2010 (Source: Tradesignum)

Conclusion

Based on improved financial performance & attractive valuation, Integra could be a good stock for long-term investment. However, the stock could be at the crest of its present cycle, with limited upside potential. To beat the cycle, Integra would depend on continued favorable return from its investment in PGMC. Would nickel ore continue to rise?