Journey to Wealth
Naim Holdings - OUTPERFORM - 28 May 2012
Period 1Q12/3M12
Actual vs. Expectations
The 1Q12 core net profit of RM16.1m came in within ours and the street's estimates, making up 22% and 21% of our FY12E core net profit and that of the consensus respectively.
Naim also recorded an exceptional loss of RM3.0m due to fair value changes in the available-for-sale financial assets of an associate and also forex losses.
Dividends Single tier dividend of RM0.03.
Key Results Highlights
YoY, the 1Q revenue declined by 22% as a result of slower recognition from its construction projects i.e. Complex Islam and Fiji National Highway.
QoQ, the core profit improved by 204%, mainly due to better property sales, which improved by 27%, and an improved margin of 16% in its construction division due to completion of works on higher margin projects. Its 33.6% subsidiary, Dayang, recorded a strong set of results with a net profit of RM16.0m. This represented about 38% of Naim's core net profit of RM16.1m.
Outlook The current order book stands at c.RM800m, which provides a 2-year earnings visibility for the group.
Moving forward, Naim is looking to kick start its new mix property development projects at Bintulu Old Airport, Kuching and Miri respectively. The total GDV for these projects is expected to be more than RM800m.
Naim is a strong contender for the KVMRT project as the group had been shortlisted for station and depot works under the Bumiputera category.
Change to Forecasts
No changes to our FY12E forecasts.
Rating MAINTAIN OUTPERFORM
Maintaining our OUTPERFORM recommendation as there is an attractive 71% upside to our TP of RM2.94.
Valuation Maintaining our Target Price of RM2.94 based on SOP valuation.
Risks Further delays in existing construction projects.
Escalating building material prices.
Source: Kenanga
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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....
