AmResearch maintains Hold on KNM Group

KUALA LUMPUR: AmResearch is maintaining its Hold call on KNM Group with an unchanged fair value of 49 sen a share based on a 35% discount to its adjusted book value estimate of 75 sen a share.
It
said on Wednesday its diluted book valuation excludes the group's
RM744mil goodwill arising from the acquisition of BORSIG
Beteiligungsverwal-tungsgesellschaft mbH (Borsig).
“We maintain KNM's
FY13F-FY15F net profit as the group's order book level appears to be
stabilising after its announcement yesterday that the group has secured
new order intakes of RM307mil,” it said.
AmResearch pointed out
that in February, KNM announced a US$100mil (RM309mil) contract secured
from Public Stock Company TAIF-NK to supply a sulphur recovery unit for
the heavy residue conversion complex in Nizhnekamsk, Tatarstan.
“KNM's
announcement revealed that its order book currently stands at RM2.4bil.
This excludes the RM2.4bil Peterborough renewable energy project and
RM600mil Sri Lanka waste-to-energy engineering, procurement and
construction job, as their project commencements remain uncertain.
“But
we understand that this order book has yet to account for KNM's 1QFY13
revenue, which could be around RM600mil. Hence, we estimate that the
group's net order book is flat on-quarter at RM1.8bil, which is
unchanged over the past three quarters,” it said.