Inter-Roller Engineering, March 15 close: 99.5

UOB KAY-HIAN RESEARCH, March 11

PUSH for higher rental yields from the retail and food & beverage segments, and to support a greater passenger throughput, airports are competing for the passenger dollar by dedicating capex to upgrade facilities. This is expected to boost demand for the engineering expertise and services offered by companies like Inter-Roller.

The company's manufacturing capacity at its two plants is estimated at $120 million per year. Management plans to expand its Malaysian facility that will increase its capacity to handle over $200 million worth of contracts.

We project net profit to rise 23.3 per cent and 32.1 per cent in FY05 and FY06 respectively, although EPS growth for FY05 will dip 16.3 per cent due to the dilutive effect of the rights issue. Inter-Roller's FY05 PE of 8.4 times is undemanding given its average net profit growth rate of 26 per cent for FY05-07. The stock should trade upwards to a conservative FY05 PE of 12 times, translating to a target price of $1.36. - BUY

《The Business Times》