- Maintain BUY on Naim Holdings, with a higher fair value of
RM2.95/share (previously: RM2.88/share) that is pegged to an unchanged 20%
discount to its sum-of-parts value.
- Naim’s 2QFY12 net profit (+94% QoQ) was ahead of both consensus
and our expectations. We had
underestimated the recovery of Naim’s construction margins after a dismal FY11,
while order book visibility has improved.
- As such, we have lifted our FY12F net profit by 47%(FY13F:
+20%, FY14F: +3%) to reflect higher new contract assumptions. But this is
truncated by a cut in contributions from oil & gas associate Dayang
Holdings and higher effective tax rate assumptions.
- 1HFY12 net profit rose 1.2x YoY at RM47mil – anchored by improving
contributions from both its core construction (+5.1x) and property (+75%) EBIT.
Contributions from Dayang rose 12% YoY (RM16mil) or 34% of group profits.
- Nevertheless, construction EBIT margin has normalised, to 7.6%
in 2QFY12 vs. 16.4% in 1QFY12 (1HFY12: 11.5%) following the near-completion of
several projects in the previous quarter.
- We have doubled our new contract forecast to RM700mil for
FY12F vs. ~ RM600mil that has already been secured YTD (FY11: <RM100mil).
Late last month, Naim won a station contract under the Sg.Buloh-Kajang MRT line
(RM208mil).
- We have raised our FY12F pre-sales target from RM213mil to
RM265mil (+24% YoY). New property sales for the first seven months of 2012 have
reached ~RM182mil, just a tad below RM184mil for the whole of 2011.
- Some of its new launches in the pipeline include a service
apartment (GDV: RM130mil) and street mall (GDV: RM180mil) on a 12ha-piece of
land that used to house the old Bintulu Airport (estimated GDV: ~RM2bil) –
although the timeline will likely be pushed back from 4Q12 to 1Q13.
- Naim declared an interim dividend/share of 3 sen (2QFY12: 5
sen). For the full year, we have assumed a total DPS of 11 sen or a gross yield
of 6%.
- As the largest landbank holder in Sarawak (~2,620 acres) with
an estimated GDV of RM9bil, Naim is refocusing on property development to tap
into rising residential demand as the SCORE projects start to take shape.
- The stock is trading at a steep 51% discount to its SOP of
RM3.60/share on the back of undemanding FY12F-14F PEs of 5x-7x (below trend
average of 9x) and P/BV ox 0.6x.
Source: AmeSecurities
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