Results Review

• INTA’s 1HFY23 net profit of RM10.1mn exceeded expectations, accounting for 71.1% of our full-year estimate. The positive variance was mainly due to higher-than-expected work progress following the arrival of new foreign workers.

• A first interim dividend of 0.5sen/share was declared. (1HFY22: Nil)

• YoY, 1HFY23 net profit surged 79.7% to RM10.1mn as revenue was 44.3% higher at RM325.0mn. The robust earnings performance was mainly driven by higher work progress and better gross margin due to the gradual stabilisation of certain construction materials and labour costs.

• QoQ, 2QFY23 net profit jumped 48.4% to RM6.0mn while revenue was 5.6% higher at RM166.9mn. The better earnings performance was primarily driven by higher gross margin.

Impact

• Given the stronger-than-expected results, we adjust our revenue recognition assumptions for certain ongoing projects. Consequently, earnings forecasts for FY23/FY24/FY25 are raised by 47.7%/19.7%/17.5%, respectively.

Outlook

• We expect the group to register another decent earnings performance in 2H2023, underpinned by its healthy outstanding order book as well as more manageable construction costs. As of end-June 2023, the group’s outstanding construction order book stood at RM1.0bn, translating to around 2.1xFY22 revenue.

Valuation

• After revising the earnings forecasts, we revised the target price from RM0.28 to RM0.34 based on unchanged 10xCY24 earnings. Maintain a Buy call on the stock.

Source: TA Research - 23 Aug 2023