NIAM ... Oct10

KENANGA RESEARCH

Awarded Bengoh Dam Construction Contract

Naim Holdings Berhad has been awarded a contract by Jabatan Kerja Raya, Kuching with a contract value of RM168.8m for the designing and building of the Bengoh Resettlement Scheme, Kuching, Sarawak.

Prior to this, Naim secured two new contracts in 2QFY10 namely: a) Bau-Semadang Road in Kuching (RM73m); and b) construction of a jetty in Tanjung Manis for ASSAR Senari (RM22m). In late August, Naim revealed that the Samsung (70%) -Naim (30%) JV had been awarded the RM2.4b Sabah Oil
Gas Terminal project.

Including the SOGT job and latest Bengoh Dam resettlement works project, group’s effective new contracts secured so far year-to-date is already close to RM1.1b.

More importantly, latest contract would lift Naim’s outstanding orderbook to RM3.7b or almost 10x its FY09 construction revenue. This would help underpin earnings visibility for the group’s construction division over the next three years.

Naim remains our top picks for Sarawak play. Naim is the prime beneficiary of pump priming for SCORE including potential infrastructure investments and is in line to secure major projects. We believe FDIs will eventually draw new population growth into Sarawak benefitting its property development division

Maintain BUY and our target price of RM4.10 applying a 11x FY11F adjusted EPS of 37.6 sen and a 41% discount to the top three construction companies average of 16.9x.