Stock Name: NAIM
Company Name: NAIM HOLDINGS BHD
Research House: OSK
KUALA LUMPUR: OSK Research is retaining its OVERWEIGHT rating on Malaysian contractors driven by expectations of more positive news flow. Its top picks are Mudajaya (BUY, TP: RM6.48) for its strong earnings growth and WCT (BUY, TP: RM3.08), as it believes more contracts are in the pipeline. It also likes Naim (BUY, TP: RM4.21) for thematic Sarawak play but downgrade Hock Seng Lee (NEUTRAL, TP: RM1.50), owing to the recent run-up in its share price. OSK Research said on Friday, April 2 that over the 1Q10 period, about RM2.85 billion worth of jobs was awarded. Domestic contracts showed a healthy 16% y-o-y increase but contracted by 38% q-o-q due to the high base effect. "We believe the domestic contract flow will exceed last year's RM9.86 billion, with better numbers showing up in the upcoming quarters," it said. It said during the 1Q10 period, of the RM2.85 billion worth of jobs was awarded, 65.2% was domestic based and 34.8% foreign. The average size per domestic job stood at RM169 million, in line with one of its key sector themes for 2010 that jobs flow will be centred on the mid-small sized ones. OSK Research said contract awards in Sarawak appear to be gaining traction, with Hock Seng Lee (NEUTRAL, TP: RM1.50, Downgrade, given the share price run-up) and Naim (BUY, TP: RM4.21) collectively bagging RM245 million worth of jobs. For the more "popular" jobs, Gadang (NR) secured the LCCT EW2 (RM291m) while IJM (NEUTRAL, TP: RM4.70) was finally awarded the RM600m Besraya extension after almost a year. "Market talk is that the UEM-Bina Puri JV and privately held AHT Norlan-Carriage JV are the finalists for the LCCT terminal building (RM750 million to RM850 million) and satellite tower (RM400 million to RM500 million). Shortlisted contractors that did not make it were Sunway (NR), IJM and Gadang. The Government is also evaluating the proposal for a RM5-6bn highway parallel to the existing NSE connecting Banting (Selangor) and Taiping (Perak), which could eventually be extended all the way to Gelang Patah in Johor. "We think the proposal makes little economic sense as the current NSE is not fully utilised (festive seasons excluded). Furthermore, the completion of the Double Track at end-2013 would already provide an alternative route, especially for cargo flow," said OSK Research. In East Malaysia, there are plans to construct an 11km bridge linking Sabah and Labuan, which could cost RM3 billion (RM6 billion if delayed). "We are sceptical on the feasibility of this project as Labuan's population is a mere 90, 000," it said. Recently, the 60:40 JV between Loh&Loh (NR) and Sinohydro received the LOI for the Hulu Terengganu Dam (RM828 million). The other finalist for the job was Gamuda (NEUTRAL, TP: RM2.75).
Company Name: NAIM HOLDINGS BHD
Research House: OSK
KUALA LUMPUR: OSK Research is retaining its OVERWEIGHT rating on Malaysian contractors driven by expectations of more positive news flow. Its top picks are Mudajaya (BUY, TP: RM6.48) for its strong earnings growth and WCT (BUY, TP: RM3.08), as it believes more contracts are in the pipeline. It also likes Naim (BUY, TP: RM4.21) for thematic Sarawak play but downgrade Hock Seng Lee (NEUTRAL, TP: RM1.50), owing to the recent run-up in its share price. OSK Research said on Friday, April 2 that over the 1Q10 period, about RM2.85 billion worth of jobs was awarded. Domestic contracts showed a healthy 16% y-o-y increase but contracted by 38% q-o-q due to the high base effect. "We believe the domestic contract flow will exceed last year's RM9.86 billion, with better numbers showing up in the upcoming quarters," it said. It said during the 1Q10 period, of the RM2.85 billion worth of jobs was awarded, 65.2% was domestic based and 34.8% foreign. The average size per domestic job stood at RM169 million, in line with one of its key sector themes for 2010 that jobs flow will be centred on the mid-small sized ones. OSK Research said contract awards in Sarawak appear to be gaining traction, with Hock Seng Lee (NEUTRAL, TP: RM1.50, Downgrade, given the share price run-up) and Naim (BUY, TP: RM4.21) collectively bagging RM245 million worth of jobs. For the more "popular" jobs, Gadang (NR) secured the LCCT EW2 (RM291m) while IJM (NEUTRAL, TP: RM4.70) was finally awarded the RM600m Besraya extension after almost a year. "Market talk is that the UEM-Bina Puri JV and privately held AHT Norlan-Carriage JV are the finalists for the LCCT terminal building (RM750 million to RM850 million) and satellite tower (RM400 million to RM500 million). Shortlisted contractors that did not make it were Sunway (NR), IJM and Gadang. The Government is also evaluating the proposal for a RM5-6bn highway parallel to the existing NSE connecting Banting (Selangor) and Taiping (Perak), which could eventually be extended all the way to Gelang Patah in Johor. "We think the proposal makes little economic sense as the current NSE is not fully utilised (festive seasons excluded). Furthermore, the completion of the Double Track at end-2013 would already provide an alternative route, especially for cargo flow," said OSK Research. In East Malaysia, there are plans to construct an 11km bridge linking Sabah and Labuan, which could cost RM3 billion (RM6 billion if delayed). "We are sceptical on the feasibility of this project as Labuan's population is a mere 90, 000," it said. Recently, the 60:40 JV between Loh&Loh (NR) and Sinohydro received the LOI for the Hulu Terengganu Dam (RM828 million). The other finalist for the job was Gamuda (NEUTRAL, TP: RM2.75).
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