Yesterday, Integrax announced that Lekir Bulk Terminal Sdn Bhd ('Lekir'), its 80%-owned subsidiary had entered into a conditional Transhipment Services Agreement with Vale International SA ('Vale'). You may recall that Vale, the world’s second largest diversified metals and mining company, had acquired 165.5ha of land in Manjung, Perak, from property developer KYM Holdings Bhd. In addition, Vale had an option to acquire another 305.95ha in Manjung. Vale has plans to invest RM9bil in an iron ore pelletizing plant on the site.
The Transhipment Services Agreement stipulates that Lekir shall provide transhipment services for iron ore to Vale for a period of ten (10) years. Lekir shall make significant addition of handling equipment & systems as well as to expand its existing marine infrastructure at Lekir Bulk Terminal. The total value of the additional capex is estimated to be about RM200 million. The facilities must be ready within 24 months of the date of the agreement. For more, go here.
Recent Financial results
Integrax is a profitable concern, which incurred a loss in QE31/12/2008. This was attributable to provision for impairment of its investment of RM35.2 million in PGMC (its associate in the Philippines).
Table: Integra's 8 quarterly results
Valuation
Integrax (currently at RM0.88) is now trading at a PER of 7.3 times (based on annualized EPS of 12 sen). For a port operator, this multiple is deemed undemanding.
Technical Outlook
Integrax has just broken above its short-term downtrend line at RM0.83-85. The share price has been rising steadily in a medium-term uptrend line, with support at RM0.75-77.
Chart 2: Integra's daily chart as at Dec 31, 2009_11.10am (Source: Quickcharts)
Conclusion
Based on good financial performance, attractive valuation & bullish technical breakout, Integrax is a good stock for trading & investment purposes.
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