Stock Name: KNM
Company Name: KNM GROUP BHD
Research House: KENANGA
KUALA LUMPUR: Kenanga Investment Research recommends Hold on KNM GROUP BHD [] with a target price of 89 sen. It said on Tuesday, March 23 its recommendation was based on FY10 EPS of 5.9 sen and PER of 15 times. "We maintain our PER assumptions as share price should hold close to 90 sen until the exercise is firmed up. Our previous contention with the stock holds, contracts flows are expected to continue on slow in the near term, with potential improvement beyond 2010," it said. On Monday, KNM said it was not extending the exclusivity period for due diligence granted earlier to BlueFire Capital Group Ltd, a company controlled by KNM group managing director Lee Swee Eng. BlueFire, together with GS Capital Partners VI Fund LP and Mettiz Capital Ltd had proposed to take over KNM for RM3.5 billion. However, they target to conclude talks by April 16, 2010. Kenanga Research said speculation was rife on Monday that the due diligence exercise would not be fully completed by the committed March 22 deadline, and post that, a lower offer price could ensue. "We viewed KNM's first offer price of 90 sen as unfavourable to long term investors as it does not 1) reflect their previous earnings capacity; 2) their historical average PER trading ranges of c.15x; and 3) current global peers average FY10 PER of 15x-19x. With such reasons to prove as potential roadblocks, an even lower offer price is highly improbable," it said.
Company Name: KNM GROUP BHD
Research House: KENANGA
KUALA LUMPUR: Kenanga Investment Research recommends Hold on KNM GROUP BHD [] with a target price of 89 sen. It said on Tuesday, March 23 its recommendation was based on FY10 EPS of 5.9 sen and PER of 15 times. "We maintain our PER assumptions as share price should hold close to 90 sen until the exercise is firmed up. Our previous contention with the stock holds, contracts flows are expected to continue on slow in the near term, with potential improvement beyond 2010," it said. On Monday, KNM said it was not extending the exclusivity period for due diligence granted earlier to BlueFire Capital Group Ltd, a company controlled by KNM group managing director Lee Swee Eng. BlueFire, together with GS Capital Partners VI Fund LP and Mettiz Capital Ltd had proposed to take over KNM for RM3.5 billion. However, they target to conclude talks by April 16, 2010. Kenanga Research said speculation was rife on Monday that the due diligence exercise would not be fully completed by the committed March 22 deadline, and post that, a lower offer price could ensue. "We viewed KNM's first offer price of 90 sen as unfavourable to long term investors as it does not 1) reflect their previous earnings capacity; 2) their historical average PER trading ranges of c.15x; and 3) current global peers average FY10 PER of 15x-19x. With such reasons to prove as potential roadblocks, an even lower offer price is highly improbable," it said.
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