Inta Bina Group Bhd (“Inta Bina”) continues to deliver solid earnings with double-digit growth (>30%) in revenue and net profit in FY18 amid the challenging conditions within the construction industry. BUY with a target price of RM0.37 based on 8.5x PER FY19 as per the closest related peers.

Following Inta Bina’s transition to Main Board in October last year, it has set the company on a stronger footing with an outstanding orderbook of RM650m, which will provide earnings visibility until year 2020. Year-to-date, Inta Bina has also secured a project worth RM108.5m to build a 40-storey affordable housing complex in Mont’ Kiara, Kuala Lumpur. As at December 2018, Inta Bina has a cumulative tender book of RM1.13bn while management also expects to secure another RM400m worth of projects to refill the orderbook this year.

With the transition to Main Board, we believe Inta Bina currently has better competencies in projects tendering to secure higher value jobs. Inta Bina has tendered for RM300m worth bungalow projects in Forest City, a multibillion-ringgit project developed by China’s leading property developer, Country Garden. Located in Johor, Forest City’s Industrialised Building System (IBS) plant has recently been certified as Malaysia’s largest fully automated IBS factory. Notably, Inta Bina had invested around RM11m in aluminium system formwork, which is part of the IBS to enhance cost efficiency.

To date, Inta Bina has completed construction projects worth over RM2.6bn from reputable clients such as EcoWorld, Gamuda, SP Setia, Tropicana to name a few. Moving forward, management has indicated to focus more on highrise projects which garners higher margins. Presently, 49% of the revenue are contributed from high-rise projects and the number has been increasing from 19% in FY2016 to 37% in FY2017.

Inta Bina has proposed a final dividend of 0.75 sen for FY18, equivalent to a payout ratio of 19% and a dividend yield of 2.5%. Going forward, we expect Inta Bina to attain net profit growth of 11% and 12% in FY19 and FY20 respectively on the back of higher projects flow within the fast improving construction sector.

Source: Rakuten Research - 29 Apr 2019