Tuesday, August 23, 2011

KNM down in active trade on lower 1H earnings

KUALA LUMPUR: KNM GROUP BHD []'s shares were actively traded and fell on Tuesday, Aug 23 after its net profit for the second quarter ended June 30, 2011 fell 23.2% to RM10.86 million from RM14.14 million a year earlier, due to slower improvement in capacity utilisation in certain operating unit.

At 9.50am, KNM fell two sen to RM1.46 with 3.97 million shares done.

Revenue for the quarter rose to RM544.30 million from RM383.21 million in 2010 due to higher revenue recognition. Earnings per share was 1.11 sen while net assets per share was RM1.83.

For the six months ended June 30, KNM's net profit fell 45.1% to RM29.87 million from RM54.48 million in 2010, on the back of revenue RM957.30 million.

Maybank IB Research on Aug 23 downgraded KNM to Sell, and cut its target price to RM1.19 (from RM2).

The research house said KNM's 1H results were a letdown, prompting it to cut 2011-13 earnings by up to 64% p.a..

While KNM delivered on topline, bottomline was a disappointment, felled by cost overruns and high operating expenses, its aid.

'While the share price has underperformed by 48% YTD, we expect performance to be further suppressed.

'There is no sign of an operating recovery and cost control is absent. Further, valuations are expensive now," it said in a note.


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