Hot Stock Naim Holdings rises 6.4% on cheap valuation, potential contract win

by **Cals** Tue 24 Jun 2014, 23:54

Hot Stock Naim Holdings rises 6.4% on cheap valuation, potential contract win

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Tuesday, 24 June 2014 11:17

KUALA LUMPUR (June 24): Naim Holdings Bhd rose as much as 6.4% as the stock’s valuation is seen to be cheap, analysts today said.

Analysts also said the Sarawak construction and property player may be on the brink of securing a contract, hence spurring the stock among the top gainers today.

At 11.06 am, Naim gained 18 sen or 4.5% to RM4.19. The eighth top gainer saw trades of some 1.3 million shares.

“Naim’s valuation is quite cheap. This may prompt investors to jump into the stock,” analyst Iqbal Zainal of Kenanga Research told theedgemalaysia.com.

“We note that the stock was previously trading at about 7 times price earnings ratio (PER) as compared to its peers of 8 to 10 times. Today, it is trading at about 9 times PER,” he added over the telephone.

According to Iqbal, Naim’s fundamentals were seen intact as it had last year secured RM500 million worth of construction jobs.

He maintained his ‘outperform’ call on the stock at RM4.20 with an unchanged target price of RM4.27.

Meanwhile, another analyst familiar with the stock said Naim could be on the brink of securing a construction project in Sarawak.

“Usually, when a construction stock rises, it is due to the firm bagging a job,” the analyst told theedgemalaysia.com.

CIMB Investment Bank Research in a note today said associate contribution from oil & gas firm Dayang Enterprise Holdings Bhd has risen, in which Naim has a 30.9% equity stake in Dayang.

“If Dayang achieves net profit of RM200 million to RM220 million in FY14 and FY15, this would translate into net profit of RM60 million to RM70 million for Naim,” the research house said.