HLIB starts Inta Bina coverage with 'Buy' call on earnings growth

KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB) initiated coverage on Main Market-listed Inta Bina Bhd with a "Buy" recommendation and a target price of 76 sen, citing stronger construction billings and an expanding higher-margin property business as key earnings drivers.

HLIB's target price, based on 10 times Inta's financial year 2027 (FY27) earnings per share, implies room for a valuation re-rating as the contractor enters a stronger earnings growth phase.

"The ascribed P/E represents a discount to the Kuala Lumpur Construction Index but is broadly in line with the average of small- to mid-cap building contractors. We see room for rerating due to its steady earnings growth trajectory and growing contribution from the higher-margin property segment," HLIB said in a research note.

The bank said Inta's earnings trajectory is supported by an RM1.6 billion construction order book, equivalent to 2.5 times FY25 construction revenue, which is entering the steeper phase of the S-curve revenue recognition.

Inta has secured RM424 million in new contracts year-to-date, lifting its construction orderbook to RM1.6 billion, nearly three times its FY19 level. Its tenderbook stands at RM3.6 billion, with HLIB expecting another RM400 million of contract wins over the remaining months, bringing full-year wins towards the company's RM800 million-RM900 million target.

Despite the significant orderbook expansion, construction revenue growth was relatively muted in FY24 and FY25 as most newly secured projects remained in their early construction stages.

HLIB expects billings to accelerate in FY27 and FY28 as more projects progress along their S-curves, noting that the majority of Inta's ongoing projects are still below 50 per cent completion.

The property development business is expected to provide a second earnings catalyst. HLIB said the segment's higher margins should improve Inta's overall earnings mix as new developments ramp up.

Following its maiden Senuri Residence project, Inta is preparing to launch Seiring Setia, with a gross development value (GDV) of RM200 million, and Aliran Restu, with a GDV of RM300 million, in the fourth quarter of FFY26 or first quarter of FY27.

HLIB said the launches are expected to lift property billings from the second half of FY27 and accelerate further in FY28 as the projects progress along their respective S-curves.

"Property development is margin accretive to the company, generating double-digit net margins vs the mid-single-digit margins of its core construction business," HLIB said.

Beyond developing its existing landbank, Inta is also exploring development rights and potential joint-venture opportunities with major property developers, which could provide additional avenues for growth, it said.

HLIB also said Inta's balance sheet, with net gearing at just 0.09 times and net debt of RM24 million as of the end of June 2026. The low leverage provides capacity to fund further property ventures while supporting its dividend policy.

The bank forecasts dividends per share of 2.5 sen, 3.0 sen and 3.5 sen for FY26, FY27 and FY28, respectively, implying payout ratios of 40 per cent, 39 per cent and 36 per cent and dividend yields of 6.6 per cent, 8.0 per cent and 9.3 per cent.

HLIB forecasts Inta's earnings to grow 4.0 per cent, 21 per cent and 29 per cent in FY26-FY28, representing a three-year compound annual growth rate of 17 per cent, driven by stronger construction billings and rising property earnings following the launch of Seiring Setia and Aliran Restu.

Inta has more than three decades of contracting experience spanning residential and commercial buildings, factories and warehouses, with more than 150 completed projects and a cumulative contract value exceeding RM5 billion.

The company entered property development in 2023 with Angkasa Senuri and subsequently diversified into the lift and escalator business through its 55 per cent-owned subsidiary IBEE Sdn Bhd, which operates under the Canny Lift brand.

HLIB identified potential penetration into the data-centre sector and merger and acquisition activity as upside risks, while prolonged conflict in the Middle East and delays to planned property launches were cited as downside risks.