KUALA LUMPUR (April 9): In spite of the soft property market, building contractor Inta Bina Group Bhd is not unduly worried.

Last year was a good year for the company as its net profit surged 24% to RM15.8 million on the back of a 12% growth in revenue to RM288.6 million. Its outstanding order book is also solid, standing at RM573 million as at end-December, which is sufficient to sustain its earnings for the next two to three years.

Its managing director Paul Lim Ooi Joo believes growth can be sustained as the group’s cumulative tender book is at a record high of RM2.35 billion at present, including pending decisions for bids submitted in 2017.

Non-residential projects such as offices and mixed developments account for about 29% or RM166 million of the order book while the balance 71% (RM407 million) are residential. About 40% of the total unbilled order book is high-rise projects.

“Right now, our bigger projects are still less than RM200 million. Moving forward, we are hoping to secure larger-scale projects that are valued around RM300 million,” Lim said of the company whose projects are Conquas- and Qlassic-compliant, and which he said has an “historical success rate” of about 18%.

At present, Inta Bina has 15 ongoing projects in the Klang Valley and Johor.

While the property sector has remained largely stagnant over the past two years, Lim is optimistic that developers will be able to ride out the tough period by offering homebuyers the right product at the right price and location.

In a recent interview with The Edge Financial Daily, he acknowledged the sector was in the doldrums.

“The property sector used to grow at over 8% over three years back but now we are at half of that. I do believe many developers are holding a lot of their unsold units.”

However, he said there does not appear to be a lack of building activity judging from developers’ outstanding order books and the many tender invitations which Inta Bina had received in the past year since its listing.

The fact that its list of clients includes a roster of well-established, public-listed names such as Eco World Development Group Bhd, S P Setia Bhd, Mah Sing Group Bhd, Tropicana Corp Bhd, Sunway and MK Land Holdings Bhd also helps.

Kenanga wrote in a research note dated April 5 that headline sales of property developers under its coverage are on a flattish trend, while earnings are expected to remain uninspiring.

But it also observed that the developers are still profitable and operating at a healthy average net gearing as most have adjusted to market conditions by rolling out more affordable housing products.

This augurs well for Inta Bina, which is beginning to gain a foothold in the affordable housing market.

In preparation for its next stage of growth, Lim said the group is hoping to partner with local manufacturers to increase the industrialised building system (IBS) content in its construction.

He explained that adopting the full IBS system may be costly in the near term, but is necessary given the persistent issues of labour shortage and rising labour costs. At present, the IBS-built segments, which include aluminium formwork and parapet walls, constitute about 35% to 40% of Inta Bina’s building projects.

“Transportation cost for bulky items such as panels can be very expensive, so partnering with local manufactures on a joint-venture, project-to-project basis, such as setting up a casting yard on-site may help reduce that hefty cost,” he said.

Led by Lim and his deputy Teo Hock Choon, the building contractor’s market capitalisation is some RM174 million based on its last transacted price of 32 sen last Friday.

This article first appeared in The Edge Financial Daily, on April 9, 2018.

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