Wednesday, November 23, 2011

KNM falls on 3Q losses, Maybank Research target price RM1.08

KUALA LUMPUR (Nov 23): Shares of KNM GROUP BHD [] fell in active trade on Wednesday after the disappointing third quarter results, which prompted Maybank Investment Bank Research to keep a sell call and lower target price of RM1.08.

At 4.11am, it was down 10 sen to RM1.13. There were 14.34 million shares done at prices ranging from RM1.12 to RM1.17.

Maybank IB Research said the RM116 million net loss in 3Q11, which was due to operating impairments and provisions totaling RM150 million, wiped out 1H's net profit of RM30 million and validates its concerns on cost management.

The research house now expects KNM to be in the red in 2011, on expectation that losses should extend into the fourth quarter.

'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 8.0 times as we roll over our valuations to 2013 (previously 10 times 2012 earnings),' it said.

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