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Thursday, June 25, 2015

KNM Group shares decline 3.82% on profit-taking

PETALING JAYA (June 25): KNM Group Bhd ( Financial Dashboard) saw its shares decline 3.82% or 2.5 sen to 63 sen on the back of profit-taking.

At 12.30pm, a total of 73.8 million shares were traded. The stock reached an inter-morning high of 66.5 sen and a low of 62.5 sen.

The stock is the most active on Bursa Malaysia today.

When contacted, SJ Securities remisier Goh Kay Chong said the stock had pared down gains made over the past few days ahead of the company’s annual general meeting (AGM) yesterday due to profit-taking.

“There is a saying that you buy on rumours, sell on confirmation,” he told theedgemarkets.com when contacted.

The stock had risen after the company announced that it had launched an SG$300 million multi-currency bonds to fund its renewable energy (RE) projects on June 19.

These include the estimated RM2 billion waste-to-energy Peterborough project in the United Kingdom.

Goh said the company possesses a bright future, standing to win contracts from the Refinery and Petrochemicals Integrated Development (Rapid) in Pengerang, Johor.

Another remisier, who requested for anonymity, also said the stock had pared gains due to profit-taking.

“I think ahead of the AGM, more people were confident of the possibility of contracts coming in (to the company),” he added.

It was reported in early May this year that Rapid’s pre-qualification bids for the construction and commissioning of steel structure, piping, mechanical equipment, electrical and instrumentation installation, insulation and painting work were open, with Eversendai Corp Bhd ( Financial Dashboard), Muhibbah Engineering (M) Bhd ( Financial Dashboard) and KNM Group among the potential bidders for package 14.

Yesterday, KNM Group chief executive officer Lee Swee Eng said the company's order book currently stood at RM4 billion, including its Peterborough project.

He said 20% of the company's order book comprises Malaysian jobs, but the company is looking at increasing the portion with downstream works from Rapid in Pengerang, Johor.

He also said the company's overall tenderbook stood at RM13 billion to RM14 billion, with about RM5 billion worth of projects from Pengerang.

Lee said KNM Group (fundamental: 0.85; valuation: 1.7) expects its overseas international RE projects to contribute to its earnings by as early as the first quarter of financial year 2016 (1QFY16).

He said its 72% stake in a biofuel plant in Thailand is expected to contribute 10% to the company's net profit in FY16, with Phase 1 of the project expected to be producing ethanol by then.

Phase 1 of the biofuel plant is capable of producing between 200,000 litres to 400,000 litres of ethanol a day.

Lee said Phase 1 of the RM2 billion waste-to-energy plant in Peterborough, United Kingdom (UK), is expected to contribute 25% to earnings in financial year 2017 (FY17), generating 17.6 megawatt.
(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.)

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