Inta Bina Group Bhd
(June 10, 28.5 sen)
Not rated with a fair value (FV) of 47 sen: We expect Inta Bina Group Bhd’s earnings growth momentum to continue in financial year 2018 (FY18) to forecasted FY21 (FY21F) at a compound annual growth rate (CAGR) of 19.2%. The residential building contractor’s first growth phase from FY14 to FY18 was impressive with a CAGR of 18.9%, despite the slowdown in the property market.

 
The next round of Inta Bina’s growth trajectory will be supported by: i) its substantial order book of RM650 million; and ii) existing Tier-1 clients who are mostly well-known developers.

Inta Bina plans to bid for bigger scale projects to gain economies of scale and better margins. Its year-to-date wins currently stand at RM286 million. We think that the group is on track to hit our estimated RM500 million of new orders, largely from existing clients. Another potential plus point may arise from the Forest City project in Johor Baru, which could see Inta Bina diversifying and broadening its clientele. The group is currently bidding for three packages totalling RM300 million.

Our FV is pegged at seven times FY20F price-earnings, in line with its historical mean. Dividend yield of 5% to 6% for the FY19F to FY21F based on 25% payout ratio (FY18: 19%) should be sustainable given its strong balance sheet and strong operating cash flow.

Inta Bina is currently in a net cash position with superior return on equity of 20% to 25%, higher than its peers. Impairment of receivables is minimal, given that most of its clients are prominent developers. — AllianceDBS Research, June 10