Integra- bottom-line shored up

Results Update

For QE31/3/2011, Integra's net profit dropped 4.8% q-o-q to RM14.2 million on the back of a 2.5%-decline in turnover to RM22.2 million. When compared to the same quarter last year, its net profit was up 59.3% while turnover was lower by 3.6%.

While net profit dropped only marginally when compared to QE31/12/2010, we must note that current quarter number was boosted by gain on disposal of an associated company, Platinum Group Metals Corp ('PGMC') of RM722k; gain on disposal of a subsidiary company, P.T. Indoexchange Tbk ('IDNX') of RM1.926 million; and forex gain of RM2.496 million. If the 2 exceptional gain on disposal were excluded, Integra's net profit would drop by 23% q-o-q to RM11.5 million. For QE31/3/2011 & QE31/12/2010, Integra did not derive any contribution from either PGMC or INDX.


Table: Integra's last 8 quarterly results



Chart 1: Integra's past 16 quarterly results

Valuation

Integra (closed at RM1.49 yesterday) is now trading at a PE of 9.7 times (based on adjusted annualized EPS of 15.3 sen which is calculated using the adjusted net profit of RM11.5 million for QE31/3/2011 & outstanding issued shares of 300.8 million). At this multiple, Integra is deemed fairly valued.

Technical Outlook

Integra is in an accelerated uptrend (S1-S1) with support at RM1.32-1.33. We can see bearish divergence in the MACD & RSI indicators which may indicate toppish in the share price.


Chart 2: Integra's weekly chart as at May 26, 2011 (Source: Quickcharts)

Conclusion

Despite the decline in its continuing operation (after excluding exceptional gains), Integra is still rated a HOLD as it is not overvalued & it is still in an uptrend.