NAIM ... Jan13

In its bids to quash the negative outlook of its rm500 million Islamic medium term notes by RAM, the group said its good financial performance in 2012 is expected to continue into 2013 due to more construction contracts and property launches.

It is enjoying strong results from its property development division, as well as improving margins on its construction side.

RAM has maintained a negative outlook on NAIM’s long term rating of NAIM’s IMTN programme, as the group’s current (Dec2012) businesses, largely in Sarawak, expose it to geographical concentration risk, and it remains a relatively smaller player among its similarly rated peers.

RAM said while the company’s recovery is expected to gain momentum, its metrics for the FY2012 particularly its fund from operations debt coverage, are expected to remain weak at below 0.2 times.

On the construction side, the current (Dec 2012) outlook for the construction industry in Malaysia and particularly Sarawak remains positive, substantially due to government spending on infra and the development of SCORE.

NAIM has also ventured into the Peninsular Malaysia’s construction industry with the group securing two MRT packages awarded by MRT Sdn Bhd. It has awarded the contract to construct elevated stations and associated works between Taman Industri Sungai Buloh, PJU 5 and Fataran Sunway worth rm205 million in Oct 2012.

In FY2012, the group has secured a total of rm700 million worth of construction contracts which brings its outstanding order book to around rm1.1 billion as at Sept 2012.

Naim also plans to venture into large scale mixed developments, and to fund the expansion of its investment portfolio and land acquisitions via means of other than borrowings. Some of the financing measures include JV, equity and etc …

As for capital expenditure on land acquisitions, taking into consideration NAIM’s track record of prudent cash flow and balance sheet management, these acquisitions will be properly managed.