• MYR0.54 FV based on 9x FY25F P/E. Inta Bina is a G7 building construction contractor with more than 30 years of operating history. Its long-term relationship with reputable developers and strategic focus in the Klang Valley may continue supporting its orderbook replenishment and profit growth. Growth is further supported by its recent foray into property development and the escalator business.

• Robust outstanding orderbook. INTA has secured new jobs worth MYR453m in FY23, including jobs from Eco World Development Group (ECW MK, NR), Sime Darby Property (SDPR MK, BUY, TP: MYR0.93) and Mah Sing (MSGB MK, BUY, TP: MYR1.55). This brings its outstanding orderbook to MYR1bn (cover ratio of 1.5x). We pencil in a target orderbook replenishment of MYR600m for FY24F, bolstered by its tenderbook of MYR6.1bn. This target is reasonable, considering that a few projects have been pushed back to this year according to management. Additionally, we learnt that INTA has tendered several design and build contracts, which may yield better margins.

• Key focus: Klang Valley. >90% of INTA’s revenue is derived from projects in the Klang Valley, allowing the group to capitalise on Selangor’s GDP growth as the Selangor Government has projected a GDP growth rate of 6.5-7% pa from 2021-2025 under the Rancangan Selangor 1 (RS-1). The increasing value of residential property transactions in Selangor and Kuala Lumpur may serve as a growth factor for its orderbook, especially with interest rates peaking.

• Foray into new endeavours. INTA's property division, Angkasa Senuri, launched its first project, Senuri Residence, on 7 Oct 2023 (GDV: MYR204m). The project has proven successful with an impressive 80% take-up rate since its soft launch. The venture presents synergistic benefits as the group is involved in every stage of the development process, ensuring better margins. Additionally, INTA has entered the lift and escalator market under the brand Canny Lift. This move not only capitalises on increased construction demand but also provides recurring income through maintenance services, complementing its project-based construction earnings.

• Earnings projection. We are projecting a 3-year earnings CAGR of 16% for INTA, underpinned by a robust outstanding orderbook and strong job win targets of MYR600m for FY24F-25F. Also, the expansion into two new businesses is providing synergistic benefits, contributing to INTA’s topline and bottomline with better margins. A rerating catalyst: The possibility of securing more jobs in Johor, as some of its long-term clients, eg ECW and UEM Sunrise (UEMS MK, BUY, TP: MYR1.60) are undertaking development in the region.

• Valuation. The 9x P/E is within the 8-10x P/E range ascribed to most small-cap peers under our coverage. In light of the healthy outstanding orderbook, we view its valuation as undemanding – trading at 5.6x FY25F P/E (>2SD below the Bursa Malaysia Construction Index’s 5-year mean). Key risks: weaker-than- expected orderbook replenishment, escalation in material costs, and project delays.

Source: RHB Research - 5 Apr 2024