Journey to Wealth
Naim Holdings - 1Q boost in construction margins BUY
- Maintain BUY on Naim Holdings with an unchanged fair value of RM2.88/share. This is pegged to a discount of 20% to its sum-of-parts value.
- Naim reported a net profit of RM16mil for 1QFY12 against total turnover of RM94mil. As expected, no dividend was declared for the quarter.
- While its results constituted 29% of our full-year estimates (consensus: 21%), we deem it to be in line as the quarter was boosted by a step-up in margin recognition following the near completion of certain construction projects.
- After some initial hiccups, progress on the Sabah Oil & Gas terminal project has gathered pace, hitting 51% as at 31 March 2012.
- As a result, construction EBIT margin improved to 7.1% against a loss in 4QFY11. But, we expect margins to normalise in the coming quarter and we have projected 4.8% for the whole of FY12F.
- Naim is stepping up its order book replenishment, and is bidding for over RM2bil worth of new projects.
- Oil & gas associate Dayang recorded higher contributions of RM5.5mil against RM4.3mil a year earlier (+27% QoQ).
- Similarly, the group recorded new property sales of RM66mil in 1QFY12 ' almost one-third the whole of FY11. New launches in the pipeline include an integrated development at the old Bintulu Airport.
- Apart from several infrastructure projects in Sarawak, we understand that Naim is also gunning for some of the work packages under the Sg.Buloh-Kajang MRT project ' of which the group has been pre-qualified under the Bumi category.
- Naim is also taking strategic steps to boost its recurring income base via a tie-up with the KPJ group to develop a new hospital in Miri within its existing Bandar Permyjaya township.
- Naim is to own a 30% stake in the JV, and would also undertake the construction of the hospital estimated to cost ~ RM70mil. Pending further details, we have yet to include any contributions from this new venture.
Source: AmeSecurities
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
