KNM bullish on prospects

PROFIT MARGIN: Borsig and Petersborough project to provide
stable recurring income streams

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KNM Group Bhd is set for stronger prospects ahead, led by its investment
in German-based Borsig AG and the United Kingdom’s Petersborough Green
Energy Project, said its managing director Lee Swee Eng.

Borsig, a cash cow for KNM, is a leader in process heat exchangers in Europe.

KNM bought Borsig in 2008 for RM1.67 billion. UOB Bank Ltd values Borsig at between RM1.8 billion and RM1.9 billion currently.

Borsig
has been one of the main contributors to KNM’s earnings with an
estimated net profit of RM112 million to RM142 million per year over a
period of three years.

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For fiscal year 2012, KNM, which is involved in the oil and gas fabrication business, posted a net profit of RM130.6 million.

For
the RM2.1 billion build-own-operate Petersborough project, of which KNM
has an 80 KUALA LUMPUR: JobStreet Corp Bhd, Southeast Asia’s largest
online employment company, plans to distribute 75 per cent of its net
profit annually beginning financial year ending December 31 2013.

Last year, owners of the jobseeker database paid out 35 per cent of its net earnings to shareholders.

For
the first quarter ended March 31 2013, Job-Street’s net profit surged
48 per cent to RM15.35 million from RM10.36 million a year ago while
revenue rose to RM43.17 million from RM37.86 million previously.

per cent stake, Lee said it is expected to start construction this year.

The company had bought the Petersborough land for RM124 million with a UOB credit facility.

“We
are confident that once this project gets started, it will create and
contribute to a stable recurring income stream for KNM,” Lee told
Business Times in an interview.

He added that Exim Bank is arranging the loan to finance the project as it is the lead syndicator.

AmSecurities
said even though KNM had bought the land, the project is still
uncertain as it requires a massive £233 million (RM1.06 billion) for the
Phase One involving a 35MW waste-to-energy plant and another £251
million for Phase Two’s 55MW.

“We are also concerned about the
group’s cashflow and capabilities to undertake new projects, given that
its proposal to issue a RM1.5 billion sukuk bond had been aborted,” the
research house said.

KNM’s current order book stands at RM4.9
billion and it is also bidding for jobs worth RM19 billion. It has won
contracts in Russia, Uzbekistan and Tatarstan over the past year.

Lee said these contracts have moderately stabilised and contributed to KNM’s profit margin.

“We
believe our stock performance is still being affected by the sentiments
of our legacy issues. The management has been working hard in
restructuring our business operations and financials,” he said.

Lee
also expects KNM to benefit from the Refinery and Petrochemical
Integrated Development (Rapid) project in Pengerang, Johor, which has a
sizeable addressable market of RM18 billion for process equipment.