Naim Holdings Berhad anticipates improved performances

In a recent interview with SunBiz Ricky Kho, Naim Holdings Berhad’s Senior Director of Corporate Services has said he expects the recent growth of the Naim Holdings’ team coupled with improved results to culminate in improving performance for the group in coming years.

The group, which is the largest property developer in Sarawak by landbank and units sold, is looking to expand outside its home market and is ready to acquire land in Peninsular Malaysia for development, said its senior director of corporate services, Ricky Kho – at the right price.

“We have been looking to move out (of Sarawak). We are looking at Kuala Lumpur and have been invited to jointly develop properties in Terengganu and Pahang, and even overseas. But the land here (peninsula) is expensive. Still, we are looking to find the right location at the right price where we can make money,” he told SunBiz in an interview.

For starters, the group has hired a number of experienced people to help it locate potential rental investment properties such as shopping malls and hotels in the country.

“This new group of people will lead Naim Holdings to the next level and become a bigger (property) player, which means we need to go outside Sarawak and go into investment properties. Such properties will provide us with a long term recurring income. This is also part of our plans to set up a retail real estate investment trust (REIT) in six to 10 years,” said Kho.

Naim Holdings currently owns and operates the two-storey Permy Mall in Bandar Baru Permyjaya, Miri, which was completed in October last year and is 95% occupied. It is expected to generate rental income of RM8 million per year.

“We also recently bought office space measuring 5,000 sq ft in Menara UOA, Kuala Lumpur, which we will establish an office here. With the award (of Package S2 worth RM204.7 million) of the MRT project for the construction of elevated stations (via its construction arm Naim Engineering Sdn Bhd), all the more reason for us to have an office here,” he added.

The group has also established an office in Sabah, after it won a RM2.4 billion Sabah Oil and Gas Terminal (SOGT) project, together with its joint venture partner Samsung Engineering Co Ltd last year.

“So far, we have not identified any property to buy in Sabah and we don’t want to rush. We are a very cautious local developer.

“We don’t simply borrow (money) unless we need it. Over the years, we hardly borrow money (from banks) until when we acquired a 34% interest in Dayang Enterprise Holdings Bhd in 2007 where we took out a RM500-million Islamic Medium-Term Notes Programme. Even then, we have only drawn down RM300 million of the available funds, with RM200 million to go,” said Kho.

In addition, Naim Hodlings has been paying out at least 30% of its net profit to shareholders via dividends each year.

The group’s landbank stands at 2,600 acres of undeveloped land, with potential gross development value (GDV) of RM9 billion. It also has an outstanding order book of RM1.3 billion-1.4 billion, which will keep it busy for the next two years.

“Of the 2,600 acres, 1,000 acres are located in Bintulu but not near the town. So, we are not quite ready for development (of the land there) yet. We are still looking for land in the right areas in Bintulu and Miri,” said Kho.

Kho said Naim Holdings’s first-half net profit of RM47.3 million has surpassed that for the full year 2011 ending Dec 31 (FY11) of RM46.9 million, due to higher sales of properties. Revenue for the six months ended June 30 2012 stood at RM214.7 million.

It expects to achieve the internal target growth of 20% in net profit to RM60-70 million for FY12.

“We don’t expect so much (contribution) from our construction division this year. We have some work in Fiji.

“We have so far secured RM500 million worth of construction projects this year. As for the MRT project, work hasn’t started yet because they haven’t handed the site over. We expect work to start early next year,” he added.

Year-to-date, the group has sold about RM200 million worth of properties, which will be recognised in next year’s books.

“Our results should improve this year. Next year would be even better. So we expect to see the upward trend again. Construction jobs are slowing coming in. but we don’t rely so much on construction (but more on property development). We got a lot more launches coming up this year and next. So things will only improve,” said Kho.

With its eyes on the Sarawak Corridor of Renewable Energy (SCORE), Naim Holdings plans to launch a RM1.5 billion to RM2 billion commercial project on land measuring about 40 acres in Bintulu Old Airport by early next year.

“The land is located in the middle of the town and within SCORE area. It is a small plot, but very valuable. We are planning to build an office block, hotels, apartments and shophouses with covered walkways.

“Some of the properties there we will sell, some we will keep for the long term. We have recently got the planning approval and we hope to start with the street mall first. Similar to Sunway Giza in Kota Damansara, we expect demand to be good. That will drive our sales next year,” he added.

“In the meantime, we will continue to launch new products both residential and shophouses in new areas of Bandar Baru Permyjaya. We started with 2,000 acres there, now we have about 900 acres to go. What we have left, depending on market demand, should last us for another five to 10 years,” said Kho.