Inta Bina eyes double-digit growth

MD says more building and construction activities expected in second half

CONSTRUCTION firm Inta Bina Group Bhd is targeting a double-digit growth in revenue this year, armed with a robust tender book and supported by a more optimistic outlook in the second half of the year.

Managing director Paul Lim Ooi Joo tells StarBizWeek that the property sector generally is expected to see a slow recovery this year.

“We expect to see more building and construction activities in the third and fourth quarter this year.

“This will be propelled by improved confidence in the market and better job security,” he says.

Inta Bina’s unbilled order book has nearly doubled since its debut on the Ace market a year ago, from RM486.16mil to RM749mil as of end-March.

From this RM776.16mil, 79% is for residential projects (both high-rise and landed) while 21% is for non-residential projects.

The order book is able to sustain the group for about two and a half years, adds Lim.

He points out that the group is currently working on five high-rise and 11 landed projects across the Klang Valley and Johor.

It is notable that Inta Bina’s clients include big property boys such as Eco World Development Group Bhd, Gamuda Bhd, Mah Sing Group Bhd, and Tropicana Corp Bhd.

As of Decr 31, 2017, the group’s tender book amounts to RM1.96bil.

Historically, Inta Bina has an average tender success rate of 25%.

However, with a downturn in the property market last year, Inta Bina secured a lower tender success rate of 18%.

The value of projects tendered in 2017 was at an all-time high of RM3.57bil, of which RM293mil was secured.

The group’s potential new clients are Sime Darby Property Bhd, Naza TTDI Sdn Bhd, and Guocoland (Malaysia) Bhd.

In addition, Inta Bina has received invitations to tender from Lion Group Malaysia, Thriven Global Bhd, Berjaya Land Bhd, UDA Land Sdn Bhd, IJM Land Sdn Bhd and Putrajaya Holdings Sdn Bhd.

Going forward, the group will consider bidding for affordable housing projects by the government.

“With the new government in place and institutional reform in the works, this could result in an open and merit-based system, which gives us a chance to bid for government projects.

“Open tender exercises will enable us to compete for market share.

“We are also hopeful that the government will take the initiative to reduce taxes on machinery and promote the full-Industrialised Building System (IBS),” says Lim.

Lim elaborates that while less labour is required when using IBS, there is a 5% to 10% higher cost involved, particularly for the pre-fab and pre-cast components.

Hence, there has to be a large project volume for IBS implementation to be viable.

So far, Inta Bina had invested some RM10mil in aluminium formwork, one of the components of IBS.

It also has plans to set up a full-fledged IBS factory in three years’ time via a joint venture, but Lim says the group will need to first secure larger projects.

For 2018, the group has allocated a capital expenditure of RM5mil, mainly for the purchase of new machineries.

Inta Bina is also in the midst of applying to transfer its ACE listing status to the Main Market by middle or late-September this year.

The proposed transfer is expected to enhance the group’s prestige and reputation, and will accord Inta Bina with greater recognition and acceptance amongst investors, in particular, institutional investors.

Lim explains that a number of institutional investors have restrictions on investing in Ace Market companies.

“Following our proposed listing transfer, we believe that we will be able to increase our institutional shareholder base.

“It will also promote Inta Bina’s corporate identity, giving greater recognition and confi- dence to all stakeholders and clients,” he says.

He adds that there will be greater access to capital, more competitive loan rates, and a wider pool for talent acquisition.

According to the group’s 2017 annual report, there are only two institutional investors in Inta Bina’s list of shareholders, making up less than 2% equity.

“Going forward, we may issue new shares to expand the group, but our focus for now would be to build a strong base and better profile,” says Lim.

The group has satisfied the requirements for the transfer of listing, which entails an aggregate net profit of at least RM20mil for the past three to five full financial years prior to submission to the Securities Commission, with a net profit of at least RM6mil for the most recent financial year.

Inta Bina’s aggregate net profit for the past three years is RM39.84mil, with a net profit of RM15.6mil for financial year 2017.

The group registered a net profit of RM4.08mil for the first quarter ended March 31, 2018, which was a 45% increase from the corresponding quarter last year.

As at Dec 31, 2017, Inta Bina has net assets amounting to RM97.8mil, net operating cash flow of RM3.62mil, while its gearing ratio is at 0.12 times.

Meanwhile, Inta Bina has a market capitalisation of RM179.3mil as of yesterday’s close and trades at a price-earnings (PE) multiple of 11.17 times.

Its peers are GDB Holdings Bhd, Crest Builder Holdings Bhd, and Kerjaya Prospek Group Bhd.

Crest Builder trades at a PE multiple of 5.65 times while Kerjaya Prospek has a PE multiple of 15.12 times.