Thursday, November 24, 2011

KNM falls below RM1 after 3Q net losses, downgrades

KUALA LUMPUR (Nov 24): KNM GROUP BHD []'s share price fell to below RM1 briefly on Thursday after it posted net losses of RM116 million net loss in the third quarter ended Sept 30.

At 3.28pm, it was down 10 sen to RM1.02. There were 21.88 million shares transacted at prices ranging from 99.5 sen to 1.07 sen.

The FBM KLCI rose 4.72 points to 1,437.89. There were 997.58 million shares done valued at RM629.23 million. There were 343 gainers, 313 losers and 259 stocks unchanged.

On Wednesday, Maybank Investment Bank Research maintained its sell call on KNM with a lower target price of RM1.08 after the latter's RM116 million net loss in 3Q11, which was due to operating impairments and provisions totaling RM150 million. The losses had wiped out KNM's 1H net profit of RM30 million.

'We now expect 2011 to be in the red, on expectation that losses should extend into 4Q. We also cut 2012-13 net profit forecasts by 33%-54% on lower EBIT margin assumptions.

'Following this, we downgrade target price to RM1.08 (-9%) based on a lower PER multiple of 8 times as we roll over our valuations to 2013 (previously 10x 2012 earnings),' said Maybank Research.

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