Naim set to benefit from state budget, upswing in O&G

by SULHI KHALID/ pic credit:

NAIM Holdings Bhd is set to gain from Sarawak’s stimulus measures after its state government announced that RM6 billion will be allocated for development expenditure in the state Budget 2020, according to Hong Leong Investment Bank Bhd (HLIB).

From a technical share price perspective, Naim is ripe to advance towards the RM1.10 to RM1.26 price range after staging a positive downtrend line breakout, the investment bank noted in a release yesterday. The stock closed six sen higher at RM1.09 yesterday.

“Naim is only now trading at 41 times price-to-book ratios and 43 times to its revised net asset value of RM2.32.

“We believe such steep discounts could provide sufficient margin of safety and cushion further price fall, thanks to the stable earnings from its oil and gas (O&G) division, strong construction orderbook and expectations of more pump-priming activities before September 2021 Sarawak state election,” HLIB stated.

Sarawak-based Naim now has a sizeable orderbook of RM1.5 billion and is slated to win more projects in the future based on its track record in various notable projects such as Sabah O&G terminal, Klang Valley mass rapid transit, Pan Borneo Highway, etc.

Naim also has sizeable development landbank — 2,500 acres (1011.71ha) in Sarawak with low holding cost, mostly located in critically masses population areas like Kuching and Miri.

Its flagship property developments include Naim Bandar Baru Permyjaya in Miri, Naim Kuching Paragon integrated development, Naim Desa Ilmu and Naim Riveria in Kuching, and Naim Bintulu Paragon integrated development in Bintulu.

Naim has built and developed more than 20,000 properties for the Sarawak community, it added.

Meanwhile, Dayang Enterprise Holdings Bhd, in which Naim has a 26% stake, is expected to record a stronger second half (2H19) as upstream activities gain traction post-monsoon season, underpinned by a RM3.3 billion orderbook.

HLIB said the prospects for Dayang remain rosy in the mid-term. “Jobs could be coming from decommissioning and abandonment of structures, Petroleum Nasional Bhd’s rejuvenation and expected oil recovery, and engineering, procurement, construction and commissioning contracts as well as maintenance contracts within the Asean region,” it said, Dayang share price closed 18 sen higher yesterday at RM2.05 giving it a market capitalisation of RM1.98 billion.

The group provides offshore topside maintenance services, minor fabrication works, and offshore hook-up and commissioning services for O&G companies. It also offers chartering of marine vessels, and equipment hire operation.