Bintai- poised to start its upleg?

Background

Bintai Kinden Corporation Bhd ('Bintai') is involved in the following businesses:

• Electrical Installation for high-rise buildings, offices, factories, hospital, hotels, departmental stores, supermarkets, schools, sports facilities, airports, aircraft hangars, roads & highways etc.
• Mechanical Installation of air-conditioning, ventilation, plumbing, sanitary and fire protection systems.
• Electrical Power Supply Installation for power stations, sub-stations, power transmission lines, distribution and communication lines and other related engineering works.
• Electrical and Instrumentation System For Oil and Gas Refineries.

Recent Financial Results

Bintai has recently announced its result for FYE31/3/2012 where it reported a net profit of RM17 million on revenue of RM368 million. This result is an improvement over last year's result where its net profit was RM10 million while its revenue was RM380 million. The jump in bottom-line is attributable to the following:

• Gain on disposal of investment properties of RM5.3 million
• Gain on disposal of Property, Plant & Equipment of RM4.4 million
• Gain on de-consolidation of a former sub-subsidiary of RM5.4 million
• Non-provision & lower share of losses in associates (amount not stated)

If you deduct the top 3 exceptional items are excluded, Bintai's results would look very pedestrian. Nevertheless, the management sounded very positive in its outlook for the next financial year based on healthy projects pipeline as well as projects being undertaken currently in Malaysia, Singapore & Vietnam.

Valuation

Bintai (at RM0.50) is now trading at a Price to Book of 0.57 times (based on NTA p.s. of RM0.87 as at 31/3/2012). I will not attempt to compute its PE ratio because its recent earning has been inflated with a few exceptional items which I am not sure that we can simply deduct from the net profit figure. Some of these items may be at the associate or subsidiary-level.

Technical Outlook

Bintai recently broke above its long-term downtrend line at RM0.40. It has also broken above its horizontal resistance at RM0.46 yesterday. Today, it is trying to break above the horizontal resistance at RM0.50. Bintai is exhibiting bullish signs of a stock about to launch into an upleg.


Chart: Bintai's monthly chart as at June 14, 2012 (Source: Tradesignum)

Conclusion

Based on technical consideration, Bintai could be a good trading BUY if it can break & stay above the RM0.50 level. Until its earning has improved & also shows consistency, the stock cannot be considered to be an investment stock.