News Naim announced that they had finally received the letter of award
(LOA) for Package S4 from MRT Co. for the construction of the elevated stations
in Section 16, Pusat Damansara and Semantan for a total contract sum of RM208m.
Comments We are neutral on the announcement as the
contract award of RM208m is within our FY12 annual order book replenishment of
RM500m.
Based on management’s guidance, the construction of the
three elevated stations will take up to 48 months and it will be completed by
2016.
We expect the contract margin to hover around 6% to 8% at
the pre-tax level, which is in line with
the company’s track record.
Outlook To date,
Naim’s outstanding order book currently stands at RM1.3b inclusive of the
contract award, which would provide earnings visibility for the next four
years.
The next rerating catalyst for Naim will be additional new
contracts secured within the remaining months of FY12. Thus far, Naim has
managed to secure RM500m worth of new contracts in FY12.
Forecast No
changes to our FY12E and FY13E earnings estimate.
This is because with the longer period of construction, we
expect the contribution of this contract could be minimal at 2% to FY12
earnings as bulk of the earnings is expected to be recognised in the next few
years.
Rating Maintain
OUTPERFORM
We maintain our OUTPERFORM recommendation due to the
attractive upside (+66%) to our TP of RM2.94.
Valuation Maintain our Target Price of RM2.94 based on
SOP valuation.
Risks Delays in
construction projects.
Escalating building material prices.
Source: Kenanga
No comments:
Post a Comment