Hot Stock KNM falls 3.4% on weaker 1Q performance

Hot Stock KNM falls 3.4% on weaker 1Q performance
Business & Markets 2013
Written by Charlotte Chong of theedgemalaysia.com
Friday, 31 May 2013 11:34


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KUALA LUMPUR (May 31): KNM GROUP BHD [] fell 3.4% as one of the most-actively traded stocks across the bourse due to the process equipment manufacturer's weaker first quarter results.

The weakers numbers have prompted analysts to downgrade the stock. At 11.28am, KNM fell two sen to 56.5 sen with some 16 million shares changing hands.

KNM said yesterday it posted a net profit of RM2.2 million in the quarter ended March 31, 2013 (1QFY13), a 93.7% drop from RM35.1 million a year earlier.

Revenue declined to RM489.6 million from RM585.8 million.

TA Securities has downgraded KNM to "sell" from "hold" and slashed its target price for the latter to 46 sen from 70 sen previously.

The research firm has also revised downward its earnings forecast for KNM by 67% 72%, and 73% in FY13, FY14 and FY15 respectively.

TA said in a note today that KNM’s 1QFY13 core net profit of RM4.6 million was grossly below the research firm's and consensus expectations.

This is because the figure merely accounts for 6% and 5% of TA's and consensus full-year forecast respectively.

According to TA, KNM's RM2.1 billion Peterborough Renewable Energy Project (PEP) has yet to take-off after being delayed from its initial launch date in the end of 2012.

“Abortion of PEP will be a major derating catalyst for KNM as we believe the group will be unable to sustain earnings based on current orderbook replenishment rate, which is slower than expected.

“Despite repeated assurance from management, earnings continue to be volatile and we do not see KNM’s fortunes turning around sustainably in the immediate term,” TA said.