Kenanga Research maintains Outperform on Naim Holdings (5073)

KUALA LUMPUR: Kenanga Investment Bank Research is maintaining its Outperform recommendation on Naim Holdings Bhd due to the attractive upside (+66%) to its target price of RM2.94.

Naim announced it 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 RM208mil.

"We are neutral on the announcement as the contract award of RM208mil is within our FY12 annual order book replenishment of RM500mil," the research house said.

Kenanga Research said based on management's 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 company's track record," it said.

To date, Naim's outstanding order book currently stands at RM1.3bil 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 RM500mil worth of new contracts in FY12," said Kenanga Research.