Inter-Roller Engineering, Aug 11 closing : 89 cents

H104 results are in line with expectations. Inclusive of the Dubai contract, the order book remained firm at $174 million, or 2.5x FY04 sales, providing visibility into the next two years.

We expect a stronger H2 as contribution from the Dubai contract kicks in. There is also a possibility of more contracts from the current $200 million of projects Inter-Roller is bidding for.

Currently, the stock is trading at an undemanding 7.2x FY05 PE, with dividend yield at a very attractive 8.3 per cent. Results were within expectations, with dividends surprising on the upside. H104 net profit rose 32 per cent year-on-year to $4.25 million while revenue rose 21 per cent to $30.7 million.

Gross margin improved by 2.4 percentage points as Inter-Roller benefited from lower cost of operations at Pontian, Malaysia, with the completion of a new factory there.

Projects at Changi's Terminal 3, Suvarnabhumi Airport in Bangkok and Jinan airport in China contributed to the increased turnover.

The group doubled its tax-exempt interim dividend to two cents and declared a policy based on a dividend cover of 1.5x, prompting us to raise forecast dividend yield to 8.3 per cent. Prospects are positive. Maintain BUY with a price target of $1.40. - DBS VICKERS RESEARCH, Aug 11

《The Business Times》