Hot Stock KNM Group surges 8.3%, second most active stock

by **Cals** Tue 01 Sep 2015, 18:57

Hot Stock
KNM Group surges 8.3%, second most active stock

KUALA LUMPUR (Sept 1): KNM Group Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) shares rose as much as 8.3% in early trading today, after bagging a RM268.38 million solid waste project on Friday.
The stock hit a high of 0.52 sen in intraday trade, before slipping back down unchanged at 0.48 sen with 43.7 million shares done as at 3.08pm.

KNM Group (fundamental: 0.85; valuation: 1.7), which is principally engage in manufacturing of process equipment and turnkey solutions catering to international energy sector, is the second most active counter today.

Last Friday, KNM Group announced that it had secured a RM268.38 million contract to undertake engineering, procurement, construction and commissioning (EPCC) work for solid waste modular advanced recovery and treatment systems waste management solutions (incorporating waste-to-energy systems) at Ladang Tanah Merah, Negeri Sembilan from Cypark Sdn Bhd.

The EPCC contract is split into two portions: offshore portion (worth RM135.38m) and onshore portion (worth RM133.0m).

In a note to clients today, MIDF Research said it understood that KNM Group will only be involved in onshore portion whereas Hitachi Zosen will only be involved with the offshore portion. The total duration of the contract is approximately 27 months.

“We are reiterating our 'buy' recommendation on KNM Group with an unchanged target price of 62 sen per share. Our target price is based on earnings per share 2016 (EPS16) of 4.8sen pegged to price-earnings ratio 2016 (PER16) of 13 times.

“The target PER is premised on a 0.5-standard deviation discount to KNM’s 10-year historical average PER of 16 times,” MIDF Research said.

The research firm said its channel checks indicate that jobs in Pengerang are still abundant despite the uncertainties shrouding the global oil market and Petroliam Nasional Bhd embarking on a cost rationalisation exercise.
Year-to-date, KNM Group has secured approximately RM330 million worth of jobs. Approximately RM180 million was secured from Toyo Engineering related to projects in Pengerang whereas RM20million was also secured from Toyo Engineering for jobs in Turkmenistan, MIDF Research said.

Shares of KNM Group have been trending up since the company had on Aug 24 announced its results for the six months period ended June 30, 2015 which saw its net profit jump 62.1% year-on-year to touch RM41 million. The counter has gained 17.1% since Aug 24.
[size=12](Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)[/size]