Hot Stock KNM falls 4% after posting disappointing 3Q/9M earnings

by **Cals** Fri 29 Nov 2013, 18:26

Hot Stock KNM falls 4% after posting disappointing 3Q/9M earnings

Business & Markets 2013

Written by Jeffrey Tan of theedgemalaysia.com

Friday, 29 November 2013 12:29

KUALA LUMPUR (Nov 29): KNM Group Bhd fell as much as 4% on disappointing earnings in its third quarter and nine-month results.

Its 9M FY13 earnings of RM20.8 million were down 45.8% year-on-year (y-o-y), while 3Q FY13 earnings shrank 25.1% y-o-y to RM7.1 million.

At 12.05 pm today, KNM fell 2 sen or 4% to trade lower at 42.5 sen. The fifth most active counter saw heavy trades of some 14 million shares.

In a note, MIDF Research said it is maintaining its ‘sell’ call for the stock. Analyst Aaron Tan Wei Min said the upside is capped by unfavourable outlook.

“We were expecting profit numbers to turn around but unfortunately, revenue recognition were still weaker than the year before,” said Tan.

“Revenue from Asia, Europe and the Americas declined due to poor project executions.”

“Our ‘sell’ rating for KNM is underpinned by weakening order book, bleak term stock catalyst, roadblocks in the listing of Borsig on SGX and deadlock in Peterborough project financing,” said Tan.

“However, we are maintaining our target price (TP) for KNM at 40 sen.”

Tan said he is also reducing his FY13 earnings estimates by 40% whilst maintaining FY14 forecasts. He added: “We are assuming lower job recognition this year, coupled with more execution of lower margins jobs.”

Meanwhile, Kenanga Research said KNM would see immediate technical support and resistance levels at 44 sen and 46 sen respectively.