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Tuesday, June 23, 2015

KNM advances as RM2b Peterborough project nears financial closure

KUALA LUMPUR (June 23): KNM Group Bhd ( Financial Dashboard) jumped four sen or 7% to become the most-actively traded stock after the process equipment maker said it planned to issue up to S$300 million (RM840.57 million) worth of multi-currency bonds.

Analysts believe KNM (fundamental: 0.85; valuation: 1.7) would use the money raised from the medium term note (MTN) programme to finance its renewable energy projects. These include the estimated RM2 billion Peterborough project in the UK.

At 12.30pm, KNM shares settled at 58 sen with some 57 shares traded. At 58 sen, KNM has a market capitalisation of RM1.12 billion.

KNM shares had risen 22% this year, outperforming the FBM KLCI's 2% decline.

Maybank Investment Bank wrote in a note that the Peterborough project was nearing financial closure, which would bode well for KNM shares.

“We reckon part of the MTN will be used to fund its renewable energy projects in Thailand (Asia Biofuels) and the UK (Peterborough) as well as working capital and RAPID works.

“We understand that KNM is likely to bid for several RAPID-related projects, which are likely to be awarded next year. On the Peterborough project, we understand that a financial closure is nearing, which will be a key catalyst,” Maybank said.

Maybank maintained its “buy” rating for KNM shares with a target price of RM1.

(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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