Armed with established track record, INTA is expected to grow strongly at 21% FY19-21 EPS CAGR, underpinned by increasing revenue recognition from its RM650m outstanding order book which now has a higher proportion of higher value works. Valuations are undemanding at 4.6x FY19 P/E (46% and 44% lower than its peers and historical average) and 1.2x P/B (13% and 25% lower than its peers and historical average), supported by healthy net cash of RM12m and projected decent FY19-21 dividend yields of 3.5-5.3%. Technically, the stock is ripe for a triangle breakout soon towards our RM0.325-0.355 upside objective.

Small but beautiful. Surviving various economic downcycles and financial crisis in the past, INTA is a building contractor with more than 25 years’ experience in Malaysia’s construction industry. In Oct 2018, INTA transferred its listing to Bursa Malaysia’s Main Market, after being listed on the ACE Market in May 2017 (IPO price: RM0.25). To date, INTA has completed more than 124 building construction projects valued over RM2.6bn, mainly in Klang Valley and Johor. The group is capable of building various types of buildings including residential, commercial, industrial and leisure properties, with increasing adoption of Industrialised Building System (IBS) construction and aluminium system formwork in projects.

Bluechips clienteIe. The bulk of its revenue comes from residential properties (FY18: 79%). While it continues to register solid revenue growth, the group has been diversifying its revenue stream to non-residential developments such as commercial suites, small office, home office (SOHO) units and shops. Overall, INTA’s earnings is expected to grow significantly on the back of its RM650m order book which offers clear earnings visibility for about 2 years, with annual replenishment of RM400-500m new orders mostly come from existing prominent clients. INTA’s client portfolio includes a diversified pool of property developers in Malaysia such as publicly-listed Eco World Development Group Bhd, Engtex Group Bhd, Gamuda Bhd, Mah Sing Group Bhd, Paramount Corporation Bhd, Plenitude Bhd, Selangor Dredging Bhd, Tropicana Corporation Bhd, S P Setia Bhd and UEM Sunrise Bhd, notable non-public listed property developers such as Perdana ParkCity SB and Mitraland Group SB, and Singapore-listed Lum Chang Holdings Limited.

Pending a triangle breakout. In the near term, INTA could still engage in a brief sideways consolidation as share prices continue to hover below the key 200 SMA and LT downtrend line (RM0.30). Nevertheless, as technical are on the mend, INTA could stage a triangle pattern breakout above RM0.30 soon to advance further towards RM0.325 (24 Apr high) before reaching our LT objective at RM0.355 (50% FR). Key supports are RM0.27 (support trend line) and RM0.265 (weekly lower Bollinger band). Cut loss at RM0.25.

Source: Hong Leong Investment Bank Research - 11 Jun 2019