HLG Research has made a buy/overweight recommendation on Ingress Corporation Bhd at RM3.16, despite the flat earnings projections for financial year (FY) 2005, as it believes the company can secure more projects for its automobile components manufacturing and railway electrification divisions.

Ingress is involved in two business segments - the automotive components manufacturing and power engineering and railway electrification.

The automotive business accounted for 80% of its pre-tax earnings for FY2002, with the rest coming from its power engineering and railway electrification division.

The research house said Ingress' estimated fair value is as RM4.22 based on its RNAV. This reflects a 33% upside from its current share price.

The fair value was obtained by valuing the automotive components manufacturing earnings at the automotive sector price earnings ratio (PER) of 7.6 times, the power engineering earnings at a 20% discount to the power sector PER of 16.1 times and the railway electrification earnings at the construction PER of 15.4 times.

The discount applied to the power division reflects the potential risk that the latter might be unable to clinch more projects from the private and public sectors beyond FY2004.

At our fair value, Ingress only trades at a PER of eight times, which is widely below the FY2002 market PER of 17 times," the research house said.