Naim Holdings Bhd
(Sept 7, RM3.39)
Maintain buy at RM3.42 with fair value of RM5.09: The Edge (Issue 822, Sept 6-12) reported details of the Sabah oil and gas terminal (SOGT) project — awarded to a joint-venture (JV) between Samsung Engineering Co Ltd (Samsung) and NCSB Engineering Sdn Bhd (a unit of Naim) last week.
The report said that the bid submitted by a partnership between China’s Petroleum & Chemical Corp (Sinopec) and Shapadu Energy & Engineering Sdn Bhd (Shapadu) is believed to have been about US$150 million (RM469 million) lower than the winning bid.
In a written reply to The Edge, Naim’s management acknowledged that the Samsung-Naim JV bid was not the lowest. However, it said it believed the JV’s superior track record and superior specifications were key to landing this job — a view we share.
Naim’s management confirmed the group’s 30% share of the JV, whose works would mainly involve the construction of support infrastructure for the SOGT.
However, we do not think the SOGT job will be a precursor to Naim making a big push for more O&G jobs in the near future. Rather, any further expansion into the O&G space would be undertaken via its associate Dayang Enterprise Bhd.
More importantly, we believe the rising proliferation of O&G jobs would be positive for Naim’s property developments in Sarawak over the mid to longer term —including in Bintulu. Part of the gas received by the SOGT would be channelled into Petronas’ Liquefied Natural Gas (LNG) complex in Bintulu via the 522km Sabah Sarawak Gas Pipeline.
To recap, on Aug 30 the Samsung-Naim JV was awarded the contract by Petronas Carigali Sdn Bhd. It is worth US$766 million and encompasses engineering, procurement, construction and commissioning (EPCC) works for the SOGT. After some delays, fresh tenders for the project were given earlier this year.
In our company update on Naim dated Aug 30, we mentioned that there were up to six firm bidders for this coveted job. We now learn that other contenders were pairings of Dialog Group-Technip SA and Kencana Petroleum Bhd-Mitsubishi Heavy Industries Ltd. — AmResearch, Sept 7
This article appeared in The Edge Financial Daily, September 8 2010.
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