Inta Bina Group Berhad (INTA) is principally involved in construction works, which include residential and non residential construction projects, as well as local infrastructure works with remaining orderbook amounting to RM1.2bn. We expect INTA’s earnings to recover to pre Covid19 level in FY22 as the company’s business operations have fully resumed following the relaxation of movement restrictions. BUY with target price of RM0.41 based on 11x PER (5-years average) over FY22 EPS.

INTA has completed more than 130 building construction projects worth over RM3.5bn, mainly in Klang Valley and Johor with residential projects accounted for more than 80% of the company’s revenue. In 2021, the company has secured 8 contracts with total contract value of RM393.4m. Presently, INTA has an outstanding construction orderbook amounting to RM1.2bn which provides great earnings visibility for the group for the next 3 years. On top of that, INTA has a tender book amounting to RM3.6bn.

INTA is constantly looking for new opportunities to grow its business. Recently the company has entered into a Shareholders’ Agreement with Lagenda Properties Bhd (LPB) to incorporate a JV company namely, Lagenda Inta SB (LISB) to undertake all construction activities of LPB in Pahang, Johor and Kedah with approximately RM1.3bn of total construction value over the next 5 to 7 years. This JV will also allow both INTA and LPB to combine specialist knowledge and expertise to leverage on resources on a larger scale and for greater returns.

In January 2022, INTA has bagged a RM160.6m construction contract for the proposed development of Sunway Artessa condominium in Wangsa Maju. The 33-month contract involves the construction of a 47-storey apartment with four levels of car park and a developer unit at the rooftop.

INTA’s FY20 and FY21 earnings were greatly affected by the Covid19 pandemic and movement control order (MCO). As for now, management guided that the business operations have fully resumed following the relaxation of movement restrictions, hence, we believe earnings to recover to pre-Covid19 level.

We are forecasting INTA to register net earnings of RM20.0m and FY22.1m for FY22 and FY23 respectively boosted by higher job recognitions. Based on historical payout ratio of 45%, we expect INTA to pay dividend of 1.7 and 1.9 sen for FY22 and FY23, translating into yield of 6.5% and 7.1% respectively. We peg a target price of RM0.41 based on 11x PER (5 years average) over FY22 EPS. BUY recommendation with a potential upside of more than 50% and attractive dividend yields going forward.

Source: Rakuten Research - 10 Mar 2022