INTA: Outlook Intact Despite Earnings Deferral, Target Price Adjusted




Outlook Intact Despite Earnings Deferral, Target Price Adjusted


INTA: Outlook Intact Despite Earnings Deferral, Target Price Adjusted

Investment Bank TA SECURITIES
TP (Target Price) RM0.25 (+25.0%)
Last Traded RM0.20
Recommendation BUY

An investment bank has maintained its “Buy” rating on a construction and property development group, citing a positive near-term outlook despite recent revisions to its earnings forecasts. The adjustments reflect a more moderate pace of project progress and deferred property contributions rather than fundamental operational weaknesses. The target price has been revised to RM0.88, down from RM1.00 previously.

Performance Review and Revisions

The group’s core earnings forecasts for FY25F and FY26F have been revised downwards by 8.5% and 11.9% respectively. However, FY27F earnings are now adjusted upward by 8.8%. These revisions are primarily attributed to slower project execution and the deferral of property contributions. The report noted challenges in the affordable housing segment, where slower sales were recorded due to high loan rejection rates among buyers.

Despite these adjustments, management has successfully maintained its margin assumptions. This resilience is largely due to effective cost controls and the group’s limited exposure to commercial projects, which have helped mitigate the impact of rising costs such as the SST expansion and minimum wage hikes.

Future Outlook and Strategic Growth

The positive outlook is significantly bolstered by a substantial outstanding order book, estimated at RM1.7 billion. This provides a healthy 2.5 times cover for the group’s FY24 construction revenue, underpinning strong near-term earnings visibility. Additionally, a robust tender pipeline of approximately RM4.5 billion, largely comprising property development projects from established developers, suggests promising future growth.

The group’s strategic expansion into design-and-build (D&B) projects is expected to enhance margins through improved cost control and value engineering, thereby strengthening its competitiveness in tenders. Management also plans upcoming launches for projects like Seiring Setia and a multi-phase development in Glenmarie. Efforts to expand into the affordable housing segment and explore opportunities in regions like Johor are also underway, further diversifying future earnings streams.

Valuation and Recommendation

Based on the updated earnings projections, the target price has been adjusted to RM0.88, applying an unchanged 11x CY26F P/E multiple. The investment bank reiterates its “Buy” recommendation for the stock. This positive stance is driven by three key factors: the group’s position as a direct beneficiary of the robust domestic property sector, strong earnings visibility supported by a resilient order book, and continuous improvements in profitability.


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