Naim Holdings - Property push Buy

Date: 
2012-09-03
Firm: 
AMMB
Stock: 
NAIM
Price Target: 
2.95
Price Call: 
BUY
Last Price: 
1.08
Upside/Downside: 
+1.87 (173.15%)

- Maintain BUY on Naim Holdings, with a higher fair value of RM2.95/share (previously: RM2.88/share) that is pegged to an unchanged 20% discount to its sum-of-parts value.

- Naim's 2QFY12 net profit (+94% QoQ) was ahead of both consensus and our expectations.  We had underestimated the recovery of Naim's construction margins after a dismal FY11, while order book visibility has improved. 

- As such, we have lifted our FY12F net profit by 47%(FY13F: +20%, FY14F: +3%) to reflect higher new contract assumptions. But this is truncated by a cut in contributions from oil & gas associate Dayang Holdings and higher effective tax rate assumptions.  

- 1HFY12 net profit rose 1.2x YoY at RM47mil ' anchored by improving contributions from both its core construction (+5.1x) and property (+75%) EBIT. Contributions from Dayang rose 12% YoY (RM16mil) or 34% of group profits.

- Nevertheless, construction EBIT margin has normalised, to 7.6% in 2QFY12 vs. 16.4% in 1QFY12 (1HFY12: 11.5%) following the near-completion of several projects in the previous quarter.

- We have doubled our new contract forecast to RM700mil for FY12F vs. ~ RM600mil that has already been secured YTD (FY11: <RM100mil). Late last month, Naim won a station contract under the Sg.Buloh-Kajang MRT line (RM208mil). 

- We have raised our FY12F pre-sales target from RM213mil to RM265mil (+24% YoY). New property sales for the first seven months of 2012 have reached ~RM182mil, just a tad below RM184mil for the whole of 2011.

- Some of its new launches in the pipeline include a service apartment (GDV: RM130mil) and street mall (GDV: RM180mil) on a 12ha-piece of land that used to house the old Bintulu Airport (estimated GDV: ~RM2bil) ' although the timeline will likely be pushed back from 4Q12 to 1Q13.

- Naim declared an interim dividend/share of 3 sen (2QFY12: 5 sen). For the full year, we have assumed a total DPS of 11 sen or a gross yield of 6%. 

- As the largest landbank holder in Sarawak (~2,620 acres) with an estimated GDV of RM9bil, Naim is refocusing on property development to tap into rising residential demand as the SCORE projects start to take shape.

- The stock is trading at a steep 51% discount to its SOP of RM3.60/share on the back of undemanding FY12F-14F PEs of 5x-7x (below trend average of 9x) and P/BV ox 0.6x.   

Source: AmeSecurities
Discussions
Be the first to like this. Showing 3 of 3 comments

ta5851

Result very good but share price not moving.....

2012-09-03 13:06

Mat Cendana

That presents a good chance to come in. But one would have to wait a bit for analysts and the market to realise this. Naim is a counter that has its seasons, blowing hot and cold. At the first sign of volume building up, that's the cue to jump in.

2012-09-03 13:18

Jian Bin Siew

Is really a worth buying if not because of GLC company. Sarawakian may don't like this counter...

2012-09-03 15:49

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