Inter-Roller, Jan 21 closing : 91.5 cents

INTER-ROLLER announced that it has received a letter of intent from Siemens Dematic to jointly develop, design and build a baggage handling system for the Dubai International Airport. Inter-Roller's share of the project is estimated at $93 million. If secured, the contract is a new milestone for the group. This will be its biggest contract secured to date. The success of this project will strengthen the group's track record and pave the way for possible future collaboration with Siemens.

The contract would potentially double the group's order book to $180 million, which is 3.5 times our sales forecast revenue for FY03. This will sustain the earnings recovery momentum for FY04 and FY05 with a flow through of $40 million in order book as a base for FY06. We estimate earnings contribution of $14 million from the contract to spread over FY04 (Sept) to FY06. This will potentially raise our earnings forecast by 5 per cent to $8.1 million for FY04 and + 6 per cent for FY05 to $8.9 million. The stock is trading at undemanding PE of 7.3x FY04 earnings and 6.7x FY05 earnings, generating an attractive dividend yield of 5.1 per cent for 2003. Maintain BUY with the target price raised to $1.20.

- DBS-VICKERS RESEARCH, Jan 21

《The Business Times》