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Brokers' Take - Inter-Roller Engineering
Brokers' Take - Inter-Roller Engineering

(2007-04-04)

Inter-Roller Engineering
April 3 close: S$1.03
MERRILL LYNCH, April 3

INITIATING coverage with a 'buy': We initiate coverage on Inter-Roller Engineering with a 'buy' recommendation and a 12-month price objective of S$1.59 based on discounted cash flow valuation. We forecast an EPS CAGR of 28 per cent over 2007-09E, translating into attractive PE multiples of 12 times 2007E and 10 times 2008E with a yield of 8 per cent.

Establishing a global footprint: Inter-Roller has succeeded admirably in penetrating the international markets for aviation infrastructure projects, in our view. Leveraging off the expertise and knowledge gained from its work on Singapore's perennial award-winning Changi Airport, Inter-Roller has gained a foothold across five continents in over 20 countries.

Excellent order book potential: Rising passenger traffic for business and leisure is driving the growth of airport infrastructure. For developing countries, aviation gateways are also a key source of connectivity for sustained economic growth. In Asia alone, projected expenditure on aviation infrastructure is expected to total US$60 billion over the next decade. This bodes well for Inter-Roller's potential order book.

Ready for take-off: Valuations are attractive, especially when coupled with Inter-Roller's strong track record of steady growth and an extremely generous dividend policy. After a more conservative stance in 2006, the management is now optimistic on forward order book prospects. We expect Inter-Roller to be re-rated in the coming year.

BUY

《The Business Times》


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