Stock Name: KNM
Company Name: KNM GROUP BHD
Research House: HWANGDBS
KNM Group Bhd
(Feb 24, RM2.43)
Maintain buy at RM2.83 with target price RM3.50: Headline 4Q10 net profit fell 63% quarter-on-quarter to RM20.6 million as KNM posted marginal losses in Asia and Oceania operations. Europe and America operating margin also moderated to 8.2% (from 13.8% in 3Q10) as the company completed the last batch of low margin jobs secured in 2009. Group operating margin stood at 5.3% against 12.8% in 3Q10. As expected, no dividend was declared for the quarter.
Net profit in FY10 of RM131.2 million was below expectations, making up only 77% of our full-year earnings estimates. However, the company's turnaround story is intact as earnings are set to rebound this year, supported by its high order book of RM4 billion. KNM is also set to benefit from increasing oil and gas activities on the local front. In the near term, we understand that the company is targeting RM500 million worth of jobs, from projects ranging from the Sabah Oil and Gas Terminal (SOGT), Petronas regasification plant and Kimanis Power Plant.
We maintain our 'buy' call on KNM with target price of RM3.50'' based on 15.5 times CY11F earnings. KNM is also poised to benefit from growing domestic and global opportunities. Valuation is undemanding at a FY11 PER of 12.5 times against local and regional peers' average of 15.7 times and 16.6 times, respectively. ' HwangDBS Vickers Research, Feb 24
This article appeared in The Edge Financial Daily, February 25, 2011.
Company Name: KNM GROUP BHD
Research House: HWANGDBS
KNM Group Bhd
(Feb 24, RM2.43)
Maintain buy at RM2.83 with target price RM3.50: Headline 4Q10 net profit fell 63% quarter-on-quarter to RM20.6 million as KNM posted marginal losses in Asia and Oceania operations. Europe and America operating margin also moderated to 8.2% (from 13.8% in 3Q10) as the company completed the last batch of low margin jobs secured in 2009. Group operating margin stood at 5.3% against 12.8% in 3Q10. As expected, no dividend was declared for the quarter.
Net profit in FY10 of RM131.2 million was below expectations, making up only 77% of our full-year earnings estimates. However, the company's turnaround story is intact as earnings are set to rebound this year, supported by its high order book of RM4 billion. KNM is also set to benefit from increasing oil and gas activities on the local front. In the near term, we understand that the company is targeting RM500 million worth of jobs, from projects ranging from the Sabah Oil and Gas Terminal (SOGT), Petronas regasification plant and Kimanis Power Plant.
We maintain our 'buy' call on KNM with target price of RM3.50'' based on 15.5 times CY11F earnings. KNM is also poised to benefit from growing domestic and global opportunities. Valuation is undemanding at a FY11 PER of 12.5 times against local and regional peers' average of 15.7 times and 16.6 times, respectively. ' HwangDBS Vickers Research, Feb 24
This article appeared in The Edge Financial Daily, February 25, 2011.
No comments:
Post a Comment