March 4, 2011

KNM - RHB Research maintains Outperform on KNM, FV RM3.45

Stock Name: KNM
Company Name: KNM GROUP BHD
Research House: RHB

KUALA LUMPUR: RHB Research Institute is maintaining an Outperform on KNM GROUP BHD [] and retained its fair value of RM3.45 a share which is based on an unchanged target PER of 15 times.

'This implies an upside of 43.6% against the current share price,' said the research house on Friday, March 4.

On Thursday, KNM Group announced that it has secured new orders amounting to RM693m so far this year, underpinned by improved sentiments in the global oil and gas industry.

This takes the current order backlog to RM5.4bn, which is an all-time high for the group. Tender book currently stands at RM17bn.

RHB Research said KNM's continual wins and the strengthening order book indicated the recovery in KNM's business is on track.

'We previously mentioned that FY11 will be a better year for KNM given that order flows have improved since 2HFY10 on the back of rising crude oil prices and better global economic sentiment that have led to heightened spending by the global oil and gas players.

'With WTI crude oil prices hovering above US$100/barrel, we expect oil majors to gain confidence in going ahead with exploration and production spending, especially in high-end projects which require more sophisticated process equipment,' it said.

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