Naim Holdings Bhd's construction division is set to improve in the coming quarters as it begins to enjoy recognitions from a few newly secured projects, says AmResearch.

This would include the RM165 million Bengoh Dam resettlement and RM2.4 billion Sabah oil and gas terminal project, it said in a note today.

It said Naim's results for the first nine months were above expectations -- third quarter earnings surged 52 per cent year-on-year to RM37 million, bringing profits for the nine-month period to RM75 million (26 per cent increase year-on-year).

'This constitutes 84-87 per cent of both consensus and our full year estimates, respectively,' it said.

AmResarch said the positive deviation mainly came from Naim's property operations.

'While property billings only rose seven per cent in the nine-month period, the division''s earnings jumped 90 per cent year-on-year to RM57 million. This resulted from a significant expansion in property margins to 44 per cent from 25 per cent a year earlier.'

Associate profits from oil and gas unit Dayang Holdings Bhd also showed a marked improvement -- growing from RM5 million in the second quarter to RM13 million in the third quarter.

On the other hand, the performance of its construction division remained somewhat choppy in the near-term. Construction earnings fell 33 per cent year-on-year to RM11 million despite a strong 84 per cent quarter-on-quarter increase in billings.

Construction margins in the third quarter dropped to 6.3 per cent from 17.3 per cent in the second quarter, partly mitigated by the recognition of variation orders and cost savings from certain projects.

'We maintain our earnings forecast and fair value of RM5.09 per share for now pending further updates from management -- with an upward bias.

'We continue to like Naim for exposure to a re-acceleration of infrastructure spending ahead of the Sarawak state elections (due in July 2011' -- with value added oil and gas kickers coming from Dayang,' the research house said. -- Bernama