NAIM Cendera Reaps Riches in Sarawak

Despite the possibility that certain mega projects will no take off any time soon, analysts and dealers are positive about the prospects of Kuching-based Naim Cendera Holdings in 2004. For a construction and property developing company that has enjoyed one of the biggest market shares in the fastest growing state in the country, many are still bullish even though there are doubts whether the Bakun electric dam or the aluminium smelter plant will materialize soon.

“Bakun or no Bakun, we will still be all right here in Sarawak,” says managing director Datuk Hasmi Hasnan. “But having Bakun will obviously be good for our property development projects in Bintulu which will begin in 2005. That area now is just jungle.”

Naim Cendera’s share price may not have been rising significantly since it first listed in September but interest in stock is still apparent. It reaches its highest of RM3.44 last month and has been trading at an average of RM2.85 for the past four months.

“There has been quite some interest in the stock,” says a head of research attached to a foreign brokerage. “Although Naim Cendera does not come under coverage at the moment, many have asked us what we think of it.”

Investors have been watching Naim Cendera, especially after the government set aside a development expenditure allocation of RM11 billion for Sarawak under the Eight Malaysia Plan for 2001 to 2005. Despite reports that the construction of the RM7.6 billion smelter plant will not happen, the idea of mega projects has not quietly gone away. Recent market talk has it that the Kuching-based construction and property developer may land a contract to build a multimillion-ringgit highway that would span the length of Sarawak.

Hasmi, when contacted, would not comment.

“They are well-connected contractor with the ability to win the contracts,” says Danny Goh of Credit Suisse First Boston (CSFB).” “Naim’s current order book of RM432 million could quadruple in the next six to nine months as it is well positioned to clinch RM1.5 million worth of new jobs.”

Analysts say the company is working with the fellow construction giant Realmild on infrastructure and building jobs in Peninsular Malaysia. In his reports on the company, Goh points out that one project that Naim Cendera and Realmild are bidding for is a RM1.2 billion project to upgrade roads in Sarawak and the Peninsular. With elections around the corner, both companies may see some goodies coming their way soon.

“It’s a pretty good company with pretty good connections,” says a head of research at a local research house. “Before it listed, not many investors would have heard about the company. Today, it wouldn’t surprise many if they got lucrative jobs because they know the right people- this is one of those counters to keep an eye on next year.”

Analysts are indeed keeping as many eyes as possible on this counter, which is said to be a good proxy for the development of what is today Malaysia’s fastest growing state. Sarawak, it seems, is on track to reach the highest gross domestic product growth for 2001 to 2003 of 4.1% per year. And if Naim Cendera does not benefit from mega projects, it will certainly benefit from recent developments in the oil and gas industry.

Naim Cendera’s flagship housing estate project, the 2,207-acre Bandar Baru Permyjaya, is conveniently located just outside Miri, Sarawak’s booming oil and gas city. At the moment, Naim Cendera is still developing some 390 acres at Bandar Baru Permyjaya and has another 1,817 acres more for future development. With some 3,534 acres of landbank in prime areas across the state, Naim Cendera is said to be the largest property developer in Sarawak.

“Shell is setting up its regional technical support center there, which will serve Southeast Asia.” Says Hasmi, who is a property valuer by profession.

“A lot of expatriates will be re-locating to Miri.”