KENANGA RESEARCH

01 August 2012

Quick Bites

Naim Holdings
Bags RM208m KVMRT package
News

OUTPERFORM
Price: Target Price:
Share Price Performance
2.50

RM1.77 RM2.94

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. We are neutral on the announcement as the contract award of RM208m is within our FY12 annual order book replenishment of RM500m. Based on managements 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 companys track record. To date, Naims 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. 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. Maintain OUTPERFORM

2.00

Comments

1.50

No v 11

Ju l1 1 Au g 11 Se p 11 Oc t1 1

Ap r1 2

12 ar 1 2

12

n 12 Ju

De

Fe b

Ja

KLCI YTD KLCI chg YTD stock price chg Stock Information Bloomberg Ticker Market Cap (RM m) Issued shares 52-week range (H) 52-week range (L) 3-mth avg daily vol: Free Float Beta Major Shareholders ISLAND HARVESTS SDN TAPAK BERINGIN SDN B LEMBAGA TABUNG HAJI Summary Earnings Table FY Dec (RMm) 2011A Turnover 409.6 EBIT 21.7 PBT 57.3 Net Profit (NP) 48.4 Core NP 48.4 Consensus (NP) Earnings Revision EPS (sen) 19.3 EPS growth (%) -50.6 DPS (sen) 4.8 NTA/Share (RM) 3.1 PER 9.1 Net Gearing (x) 0.2 Dividend Yield (%) 2.7 2012E 495.9 61.4 99.6 73.7 73.7 76.1 29.5 52.4 7.4 3.5 6.0 0.0 4.2

Outlook

NHB MK Equity 442.5 250.0 2.39 1.54 203,449 67% 1.3

Forecast

Rating

Valuation Risks

We maintain our OUTPERFORM recommendation due to the attractive upside (+66%) to our TP of RM2.94. Maintain our Target Price of RM2.94 based on SOP valuation. Delays in construction projects. Escalating building material prices.

The Research Team research@kenanga.com.my +603 2713 2292

PP7004/02/2013(031762)

KENANGA RESEARCH

Ju l1 2

n 12

c1

ay

1631.6 6.6% 7.9%

12.3% 11.0% 10.0% 2013E 689.2 94.3 123.5 91.4 91.4 89.7 36.5 24.0 9.1 3.4 4.8 0.0 5.2

Naim Holdings

01 August 2012

Income Statement FY Dec (RMm) 2009A Revenue 566.9 Operating Profit 98.2 Other Income Interest Exp Associate Exceptional Items PBT Taxation Minority Interest Net Profit Core Net Profit 5.0 -2.8 19.5 0.0 115.5 -30.5 0.0 85.0 85.0

2010A 612.7 109.4 4.9 -7.6 26.5 0.0 132.0 -32.1 2.1 97.8 97.8

2011A 409.6 21.7 12.0 -14.0 33.0 0.0 57.3 -9.0 0.0 48.4 48.4

2012E 495.9 61.4 14.5 -14.0 46.4 0.0 99.6 -25.9 0.0 73.7 73.7

2013E 689.2 94.3 20.1 -14.0 37.0 0.0 123.5 -32.1 0.0 91.4 91.4

Financial Data & Ratios FY Dec (RM m) 2009A Growth Turnover (%) 8.3 Operating Profit (%) 65.8 PBT (%) 43.4 Core Net Profit (%) 40.9 Profitability (%) Operating Margin PBT Margin Core Net Margin Effective Tax Rate ROA ROE DuPont Analysis Net Margin (%) Assets Turnover (x) Leverage Factor (x) ROE (%) Leverage Debt/Asset (x) Debt/Equity (x) Net Cash/(Debt) Net Debt/Equity (x) Valuations EPS (sen) GDPS (sen) NTA (RM) PER (x) Gross Div. Yield (%) P/NTA (x) 34.0 8.0 2.6 5.2 4.5 0.7

2010A 8.1 11.4 14.3 15.1

2011A -33.1 -80.2 -56.6 -50.6

2012E 21.1 183.4 73.6 52.4

2013E 39.0 53.5 24.0 24.0

17.3 20.4 15.0 26.4 8.0 13.0 40.9 0.5 1.6 13.0 0.1 0.2 0.4 0.1

17.9 21.6 16.0 24.3 9.3 13.5 15.1 0.6 1.5 13.5 0.1 0.2 0.7 0.1

5.3 14.0 11.8 15.7 3.7 6.5 -50.6 0.3 1.7 6.5 0.3 0.5 0.4 0.2

12.4 20.1 14.9 26.0 5.3 9.2 52.4 0.4 1.7 9.2 0.3 0.4 0.1 0.0

13.7 17.9 13.3 26.0 6.1 10.5 24.0 0.5 1.7 10.5 0.2 0.4 0.1 0.0

Balance Sheet FY Dec (RMm) Fixed Assets Intangible Assets Other FA Inventories Receivables Other CA Cash Total Assets Payables ST Borrowings Other ST Liability LT Borrowings Other LT Liability Minorities Int. Net Assets Share Capital Reserves Equity

2009A 108.2 0.0 278.9 27.1 292.6 260.2 90.1 1057.2 183.1 130.9 7.1 10.1 51.6 22.0 652.4 250.0 402.4 652.4

2010A 123.7 9.6 312.9 32.7 308.1 228.4 39.2 1054.6 137.2 104.4 4.4 20.7 48.5 15.4 724.0 250.0 474.0 724.0

2011A 118.4 9.0 400.2 26.9 280.0 243.2 213.5 1291.1 132.8 7.9 1.3 339.1 46.3 16.2 747.5 250.0 497.5 747.5

2012E 121.7 9.0 395.0 25.9 277.8 237.5 315.1 1381.9 158.7 7.9 7.8 339.1 46.3 19.5 802.7 250.0 552.7 802.7

2013E 127.8 9.0 395.0 35.5 386.0 237.5 316.8 1507.7 214.0 7.9 9.6 339.1 46.3 19.5 871.3 250.0 621.3 871.3

39.1 10.0 2.8 4.5 5.6 0.6

19.3 4.8 3.1 9.1 2.7 0.6

29.5 7.4 3.5 6.0 4.2 0.5

36.5 9.1 3.4 4.8 5.2 0.5

Source: Kenanga Research

Fwd PER Band
PRICE (RM) PER 3.1 x PER 7.0 x PER 10.9 x PER 14.9 x PER 18.8 x

Fwd PBV Band

PRICE (RM) PBV 0.4 x PBV 0.9 x PBV 1.5 x PBV 2.0 x PBV 2.6 x

9 8 7 6 5

10 9 8 7 6 5

4
3 2 1 0 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11

3 2 1 0 Jun-08 Jun-09 Jun-10 Jun-11 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Sep-08 Sep-09 Sep-10 Sep-11 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Jun-12

Source: Kenanga Research

Sum-of-parts valuation No. 1 2 3 Division Construction Property Oil & Gas-DEHB Net debts Fair value (RM) Value (RMm) 363.2 117.9 387.6 (133.5) PE 10x 0 12 DCF (WACC) 0 11% 0 Per share (RM) 1.45 0.47 1.55 3.47 -0.53 2.94

Source: Kenanga Research

Page 2 of 3

KENANGA RESEARCH

Stock Ratings are defined as follows: Stock Recommendations OUTPERFORM : A particular stocks Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). A particular stocks Expected Total Return is WITHIN the range of 3% to 10%. A particular stocks Expected Total Return is LESS than 3% (an approximation to the 12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate).

MARKET PERFORM : UNDERPERFORM :

Sector Recommendations*** OVERWEIGHT NEUTRAL UNDERWEIGHT : : : A particular stocks Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). A particular stocks Expected Total Return is WITHIN the range of 3% to 10%. A particular stocks Expected Total Return is LESS than 3% (an approximation to the 12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate).

***Sector recommendations are defined based on market capitalisation weighted average expected total return for stocks under our coverage.

This document has been prepared for general circulation based on information obtained from sources believed to be reliable but we do not make any representations as to its accuracy or completeness. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may read this document. This document is for the information of addressees only and is not to be taken in suBangsar South Citytitution for the exercise of judgement by addressees. Kenanga Investment Bank Berhad accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or any solicitations of an offer to buy or sell any securities. Kenanga Investment Bank Berhad and its associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein from time to time in the open market or otherwise, and may receive brokerage fees or act as principal or agent in dealings with respect to these companies. Published and printed by: KENANGA INVESTMENT BANK BERHAD (15678-H) 8th Floor, Kenanga International, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Telephone: (603) 2166 6822 Facsimile: (603) 2166 6823 WeBangsar South Cityite: www.kenangaresearch.com Chan Ken Yew Associate Director

Page 3 of 3

KENANGA RESEARCH