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

(2007-05-17)

Inter-Roller Engineering
May 16 close: $1.02
MERRILL LYNCH, May 15

1Q RESULTS in line; one-cent interim dividend: The results were in line with our expectations. 1Q earnings came in at 20 per cent of our full-year forecasts. We expect the second half to be stronger as the revenue is being recognised for more projects.

The company has declared a one-tier tax-exempt interim dividend of one cent per share for 1Q07.

Secured first-ever project in North America: Inter-Roller was awarded a $16.3 million contract to provide a baggage handling system (BHS) in Winnipeg, Canada. The deal represents the group's first success in penetrating the North American markets, which is the largest BHS market in the world. We believe this will be the first of many North American projects that Inter-Roller can secure.

New orders worth $60.8 million secured: To date, Inter-Roller has secured new orders worth $60.8 million compared to $56 million for the whole of 2006. The ability of the company to continually secure orders reinforces our belief that its order book would reach $153 million by the end of 2007.

The group is currently targeting projects in Qatar, Abu Dhabi, Saudi Arabia, Oman, Beijing, Shanghai, Guangzhou, Shenzhen, Kunming and Vietnam. Based on potential outstanding projects, we expect an annual 15 per cent growth in order book over 2008-09.

Reiterate 'buy' with price objective of $1.59: We reiterate our 'buy' recommendation with a 12-month price objective of $1.59 based on discounted cashflow valuation.

We forecast an EPS CAGR of 28 per cent over 2007-09E, translating into attractive PE multiples of 13 times 2007E and 10 times 2008E with a yield of 8 per cent. BUY

《The Business Times》


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