SESDAQ-LISTED Inter-Roller Engineering has bagged a sizable $93 million deal arising from a tie-up with German engineering giant Siemens Dematic to jointly set up a baggage handling system for the Dubai International Airport's second phase of expansion.

Following Inter-Roller's announcement on the project yesterday morning, shares in the baggage handling system specialist surged 5.7 per cent, or 4.5 cents, to close at 83.5 cents.

This was after a 5.5-cent, or 7.5 per cent, jump on Monday to 79 cents. The stock had hit a record high of 87.5 cents in August last year.

The company said it has received a letter of intent from Siemens Dematic to jointly develop, design and build a baggage handling system for the airport, and the $93 million sum constitutes Inter-Roller's share of the project.

It added that it has begun development work for the new system, which is to be approved by the Department of Civil Aviation Authority of Dubai.

A prototype is expected to be tested and approved by the middle of this year.

The baggage handling system is to be built in phases, and the first 80 per cent is slated for completion by 2006.

As such, Inter-Roller said, the project is expected to contribute to its turnover and profitability in its current financial year ending December 2004, and subsequent fiscal years.

At the end of September 2003, the group had total outstanding orders of $93.7 million.

Contacted yesterday, managing director Lim Yee Min told BT that the total project's value is several times Inter-Roller's portion, and Siemens Dematic is the tenderer.

The two companies have been in talks for more than six months on an exclusivity agreement under which they would work together on this project.

'It's a big project for us, and Siemens teamed up with us because we have strengths in this area, like design capabilities, good equipment, and competitive prices. So this puts them in a better position vis-a-vis their competitors,' said Mr Lim.

He added that while Inter-Roller has taken on many baggage handling projects on its own, winning tenders against competitors like Siemens Dematic and Japanese giant Kawasaki, it also works with these competitors if there are synergies.

'For every project, we will have to evaluate what's the best strategy that will put us in the best position, and there's no fixed formula that we should work with the same partner each time.'

Inter-Roller, which was founded around 25 years ago, is expected to post its full year 2003 results in mid-February.

For the nine months ended September 2003, it chalked up net profit of $4.8 million against a net loss of $1.1 million a year earlier, while its turnover trebled to $39.5 million from $13 million previously.

《The Business Times》