Period 3Q12/9M12
Actual vs. Expectations The
9M12 core net profit of RM73.6m came in above ours and the street’s estimates,
making up 100% and 86% of ours and the consensus’ FY12E core net profit of
RM73.7m and RM85.7m respectively.
Dividends No
dividend was declared for this quarter.
Key Results Highlights
YoY, the 9M12 core net profit improved significantly
by 80% from RM40.9m to RM73.6m underpinned by its property sales growth of 90% (from
RM81.6m to RM155.1m) coupled with an improved operating margin in its
construction division by 13.7ppt (from 4.3% to 18.0%) due to certain
high-margin projects, e.g. Bengoh Dam.
QoQ, its 3Q12 core
net profit improved marginally by 2%, predominantly due to a better operating
profit recorded for its construction division of RM18.6m (>100%) albeit a
slide in the property’s operating profit from RM13.8m to RM6.9m (-50%) coupled
with a lower effective tax rate of 2% from 11% previously. Its 33.6% subsidiary,
Dayang, continued to record a stronger set of results, further contributing RM13.9m
(+32%) to Naim’s profit before tax for the current quarter.
Outlook To
date, Naim’s outstanding order book stands at c.RM1.0b, which would provide
earnings visibility for the next four years.
Change to Forecasts
We have increased our FY12-13 earnings forecasts
by 30% and 23% respectively as we had lowered our FY12 effective tax rate assumption
due to certain non-taxable incomes derived over the last two quarters and after
factoring in a higher associate and joint venture contribution.
Rating MAINTAIN OUTPERFORM
Maintaining our
OUTPERFORM recommendation as there is an attractive upside of 42% to our TP of
RM2.62.
Valuation We have revised our Target Price higher from RM2.46
to RM2.62 based on SOP valuation after raising our FY12-13 earnings above.
Risks Delays in existing construction projects.
Escalating building
material prices
Source: Kenanga
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