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Naim eyeing over RM1b worth of jobs

KUALA LUMPUR: Sarawak-based property developer Naim Holdings Bhd is pursuing projects worth more than RM1 billion, according to senior director Ricky Kho.

"Sarawak is a land rich with resources and opportunities. Its growth via the Sarawak Corridor of Renewable Energy (Score) will generate business potential in all forms, including plantations, energy and construction. So we have more than RM1 billion worth of projects that we are pursuing," he said.

The projects Naim is bidding for include the construction of a road near Balingan, the new Mukah Airport as well as a 200-unit residential project at Samalaju.

According to a report by AmResearch dated Aug 9, the company is finalising the details of an integrated development project on 13ha of prime land within the Kuching city centre with an estimated gross development value (GDV) of RM1.5 billion.

Naim is also in the process of submitting designs for an integrated development within the 15ha old Bintulu Airport site with an estimated GDV of RM1.5 billion.

Naim has a 39% stake in a tripartite joint venture tasked with developing an integrated township near the proposed Samalaju Industrial Park — home to the bulk of the energy intensive industries under Score — set to be completed by 2013.

For its 1QFY11ended March 31, earnings came in below analysts' expectations. Net profit fell 43.8% quarter-on-quarter (q-o-q) and 12.6% year-on-year (y-o-y) to RM12.2 million while revenue fell 38% q-o-q and 2% y-o-y to RM120.9 million.

The decline has been attributed to slower progress billing in its property segment and the decline in margins, as well as the lack of new orders replenishment in the construction arm.

As at March 31, its net assets per share stood at 2.89 sen.

The underwhelming 1Q performance prompted analysts to slash their forecast for Naim in FY11.

"We believe there are downside risks to Naim's earnings this year due to low levels of unbilled property sales, reduction in its stake of the Sabah Oil and Gas Terminal (SOGT) from 30% to 10% and potentially disappointing job wins," said OSK Research on May 23.

TA Securities also adjusted downward its FY11 earnings forecast for Naim by 38.8% and FY12 by 42.6%.

"We took into account the lacklustre demand for residential properties in Sarawak and slower order book replenishment on its construction front," it said.

Kho said as much, explaining that profit growth for FY12/FY13 would remain flat compared with FY10 as the company consolidates its business segments.

"We are focusing more on properties and less on construction so we are moving our resources to properties as well as oil and gas. We cannot hope to achieve a higher profit considering the company is being consolidated," he said.

Nevertheless, several analysts remain positive on Naim, calling a "buy" on its stock.

AmResearch has a "buy" call on Naim despite forecasting lower revenue and earnings in FY11 for the group. It expects revenue to increase gradually in FY12 and FY13. However, it lowered its fair value for Naim to RM3.72 from RM4.46 previously.

TA Securities also has a "buy" call on Naim, viewing the stock as a dividend stock. It has forecast net dividends per share of 13 sen for FY11, yielding 6.4% based on Naim's closing of RM2.03 last Friday.

According to Bloomberg data, four out of five analysts covering Naim have "buy" calls while OSK Research has a "trading buy" call on the stock, resulting in a median target price of RM3.88.

With intensified efforts to step up property launches, coupled with its interest in the three potential land deals in Batu Lintang, Samalaju and Bintulu, Naim's future prospects remain intact.

"The company's order book, which amounts to RM3.2 billion, will sustain the company for the next three to four years," Kho said.

Naim's 1,025ha landbank, which will be developed into residential projects, as well as the utilisation of 17ha of land set aside for the Bintulu old airport, should not be overlooked.

It also has plans to develop commercial and other properties in Kuching, Bintulu and Miri with a GDV of RM8.3 billion.

It was reported last week that Naim's subsidiary Naim Engineering Sdn Bhd has been shortlisted to bid for jobs under the multi-billion ringgit Prasarana MyRapid Transit project in the Klang Valley.

Naim has a 36% stake in oil and gas player Dayang Enterprise Holdings Bhd which it acquired in 2007.

Dayang Enterprise, through its subsidiaries, provides offshore maintenance services, minor fabrication services, offshore hookups as well as the commissioning and chartering of marine vessels to the oil and gas industry.

"Dayang Enterprise is doing very well and we expect good things to come from it," said Kho.

AmResearch said it expects Dayang to contribute 30% to 40% of Naim's bottom line over the next three years.

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