NAIM : Maintain Buy, target price RM3.90

MIDF Research has maintained its "Buy" call on Naim Holdings Bhd (5073)with target price unchanged at RM3.90, although it was reported that its unit, NCSB Engineering Sdn Bhd, together with Samsung Engineering Co Ltd, won a RM2.4 billion job from Petronas.

"Until a clearer picture emerges, we are maintaining our forecast for financial year 2010 and financial year 2011," it said.

The research house, however, noted that the deal is definitely positive on the firm's share price in the near term. MIDF said this is based on sum-of-parts valuation relative to price earnings ratio approach, suggesting potential total returns of 14 per cent (including 2.7 per cent dividend yield).

"The target price will be reviewed on the upside pending further detail," it said.
Notwithstanding this, Naim has an order book of RM1.85 billion, which is centred on the Kuching flood mitigation project.

In addition, the company also holds Letter of Intents worth RM1.5 billion for the subsequent phases of the Kuching project and other road works.

"Prospects for new order book should improve further with the development of Sarawak Corridor of Renewable Energy and more infrastructure-related jobs," MIDF said.