Inta Bina Group Bhd is a construction company that builds various types of buildings such as residential, commercial, industrial and leisure properties. It typically acts as the main contractor for its building construction projects. Amongst the big customers of INTA includes, ECO World, Gamuda, SP Setia, Mah Sing, Mitraland, Sunway, UEM and many others.
INTA has basically gone through the 1997 – 1999 financial crisis and survived through it. 2017 they have issued to go IPO under ACE market and they have recently moved over to the main market in the year 2018. They are currently expanding to downstream construction and they are registered under grade 7 contractor which technically means that they have no limit when bidding for projects including those projects above 100 million onwards.
In their event, they also mentioned they will be giving out their first dividend of 0.75 sen per ordinary share (subjected to voting in their upcoming EGM).
Dividend = 0.75 sen per share
Dividend Payout Ratio = 18.94 %
Total Dividend in RM = RM 4,014,000
Project breakdown by segmentation
INTA does projects for residential and non-residential houses as shown in the image.
Residential includes Bungalows, Terrace houses, Townvillas, Condo, etc
Non-residential includes Shop lots, Factories, Hotels, etc
As of now they are still heavy on the residential area low-rise building but in the future they will be pushing for more high-rise projects as they have higher profit margin many high rise low cost houses are to be built according to the government’s budget 2019. Although high-rise have higher profit margin, they are also much tougher and require more skilled workers as there are greater risk of houses collapsing. INTA’s revenue by location would be Klang Valley and Johor, while Klang valley taking around 92% of the group’s revenue.
INTA’s current ongoing projects are in the image, having a total of 1.131 bil of total contracts value and about half is already completed, balance is 650 million projected to be completed somewhere around the late 2019 or 2020.
We shall now analyse on their financial performance
Although they have been public listed only on 2017 but they have shown their track record since 2014. We will now calculate their CAGR to see how profitable they are. For exact figures please refer to the image below.
5 Years CAGR
Revenue = 11.73 %
EPS = 18.92 %
Net Profit = 18.95 %
Revenue, EPS and Net profit has been increasing YoY at a 2 digit CAGR growth every year but their share prices has been falling ever since their IPO and their move to main market, are they a good buy? Are they undervalued? Why does their company grow in revenue but stock price is falling? We shall further investigate.
Their assets have been increasing YoY from around 116 million in 2014 to around 307 million in 2018, for exact figure please see image below. Current ratio cross calculation with their liabilities they have been from having more liabilities than assets at the year of 2014 with a current ratio of 0.86 till now they are having more assets than liabilities as of 2018 with a current ratio of 1.33 times. What worries me is their short term debt has been increased substantially in 2018 compared to their 2017 values. Long term debt has been increasing as well which worries me.
Now let’s take a looks at their debt to equity. In the year 2014 they have 127.7% of total debt to total equity which even shareholder’s money isn’t enough to cover their total debt. It has hit their lowest ever since their financial year of 2017 of only 11.5% which I think that is ideal but as it goes to 2018 it has increased to 28.5% which worries me as we are getting closer and closer to the global recession taking in more debt in such a time to rapidly grow their company isn’t really ideal in my opinion. In my opinion they should slow down their growth and be conservative on their cash to prepare for the upcoming crash.
That said their cash as also substantially increased from 730 thousand in 2016 to a whopping 11,778 million in 2018, they should have used their cash to pay their debts especially their short term debt to reduce the interest paid in the next year. In my opinion they should not be giving out dividends this year and focus on making their debts as low as possible because of rising interest rates.
What I think that is really good about them is their tender book size of 1.13 billion with still an outstanding order book of 650 million, this will give them good revenue moving forward. Their order book to revenue ratio is 1.7 which you can also say without any new projects they are able to last at least 1.7 years before they have no revenue.
Now finally we shall see if their directors have the same interest as their shareholders. The director of the company himself is holding around 33% stake at the company and the other directors in total they are all holding around 59% stake in the company. We can tell that the director’s interest is aligned with the shareholders in growing the company.
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