Wednesday, November 23, 2011

Maybank IB Research maintains Sell on KNM

KUALA LUMPUR (Nov 23): Maybank Investment Bank Research is maintaining its sell call on KNM GROUP BHD [] with a lower target price of RM1.08.

It said on Wednesday 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 our concerns on cost management.

'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),' it said.

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