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Naim Indah's independent adviser recommends shareholders say yes to Gateway Klang Project

KUALA LUMPUR (April 2): The independent adviser for Naim Indah Corp Bhd (Naim Indah) has recommended non-interested shareholders to vote in favour of the company’s proposal to provide project management services to the Gateway Klang Project, after it was awarded the contract in Feb 11, 2015.

“Based on our evaluation and comments on the proposed award, we are of the opinion that the terms of the proposed award are fair and reasonable and are not detrimental to the non-interested shareholders of the company,” said the independent adviser, FHMH Corporate Advisory Sdn Bhd, according to Naim Indah’s filing to Bursa Malaysia today.

According to the firm, the proposed award is expected to contribute positively to the earnings and earnings per share of the Naim Indah Group for financial year ending 2015 (FY15), and will enhance the net asset position of the group.  

It also noted the project will not have any material impact on the gearing of the group for FY15.

“Accordingly, we recommend that the non-interested shareholders of the company vote in favour of the ordinary resolution pertaining to the proposed award to be tabled at the forthcoming EGM (extraordinary general meeting) of the company,” it added.

To recap, Naim Indah had, on Feb 10 this year, been awarded a contract by Lagenda Erajuta Sdn Bhd (Lagenda), the developer of the Gateway Klang Project, to provide project management services.

The project is a mixed development of shop offices, hotel towers and office suites. It also has a mall with a gross floor area of approximately 2.32 million sq ft.

The contract is deemed a related party transaction as one of Naim Indah’s executive director, Datuk Siaw Swee Hin, is also a director of Lagenda. In addition, one of Naim Indah’s former non-executive director, Datuk Raymond Chan Boon Siew, is now a Lagenda director.

Naim Indah is primarily engaged in the business of property development, and the logging and selling of round-end timber logs and trading of building materials.

Due to the award, it has to seek shareholders’ approval at an EGM to be held at 10am on April 17, to accept the award and to diversify its business into project management, property investment, construction and renewable energy.

“The proposed diversification is part of the group’s long term strategy of diversifying into other businesses/industries with strong growth prospects, instead of depending solely on its business in timber logging where revenue has been declining... In view of the lacklustre performance of the current business segments, the group intends to diversify and expand its business activities...” said Naim in the filing today.

Its board is also of the opinion that the proposed diversification would contribute positively to its future earnings, provide it with additional revenue streams, and improve the financial position of the group.

Naim Indah (fundamental: 0.4; valuation: 0.6) is also proposing to introduce a share issuance scheme (SIS) that will involve the issuance of up to 15% of the company’s issued and paid-up share capital to eligible persons, at an issue price to be determined later. This SIS proposal is also to be deliberated by its shareholders at the EGM.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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