KUALA LUMPUR: JF Apex Research is valuing construction company Inta Bina Group Bhd
, which is seeking as listing on the ACE Market, at 33 sen a share, which 32% above its offer price of 25 sen.
It said at 33 sen a share, this was based on 10.6 times 2017F price-to-earnings ratio (PER).
“The assigned PER is within small & mid-cap range of 10 to 13 times amid prevailing booming construction sector,” it said.
JF Apex Research pointed out Inta Bina is the first construction company to be listed on the ACE Market with established track record.
Upon listing, it will have a market capitalisation of RM133.8mil. It has 25 years of track record in the domestic construction industry.
Inta Bina is primarily a building contractor and capable in constructing various types of buildings such as residential, commercial, industrial and leisure properties.
“The group is led by its managing director, Lim Ooi Joo and deputy managing director Teo Hock Choon. Both of the key personnel have more than 30 years of working experience in the construction industry.
“We believe Inta Bina has better chances to secure more contracts with the management’s hands-on experience and better understanding of their client’s requirement and needs,” it said.
Inta Bina has completed more than 110 building construction projects mainly in Klang Valley and Johor with a total sum of value more than RM2bil.
“Favourable FY17 earnings growth is underpinned by sizeable outstanding orderbook. The outstanding orderbook provides revenue visibility of 1.7 times times of FY16 revenue.
“We opine that the group could achieve revenue of RM379mil (+47.38% on-year) and RM337.1mil (-11% on-year) for FY17F and FY18F respectively on the back of RM446mil outstanding orderbook (as of March 31, 2017) in addition to our conservative new orderbook replenishment assumptions of RM260mil for FY17F and RM240mil for FY18F.
“Thus, net earnings growth is expected to grow by 32.45% to RM16.9m in FY17F before tapering off by 18.1% on-year to RM13.8mil in FY18F.
“Over the years, the group has strove to complete projects within the contract period and at the same time maintain high quality of works to build long-term rapport with its clients. Inta Bina’s clients include Gamuda, SP Setia, Eco World Development, Mah Sing, Tropicana Corporation, UEM Sunrise and other prestigious developers,” it said.
JF Apex Research pointed out that the real estate construction market growth remains resilient despite softening property market. Based on Protégé Associates’s study, the compounded annual growth rate for the real estate construction market in Malaysia for 2017-2021 is estimated to be 4.8%.
It said the growth rate is feasible which is in line with the nation’s GDP growth. Meanwhile, government’s effort to build more affordable houses may generate higher jobs for the building contractors.
Limited time offer:
Just RM5 per month.
