Written by Surin Murugiah of theedgemalaysia.com
Tuesday, 22 November 2011 18:58
KUALA LUMPUR (Nov 22): KNM GROUP BHD [] posted net loss RM116.29 million for third quarter ended Sept 30, 2011 compared to net profit RM56.09 million a year earlier, due mainly to one off provision for foreseeable losses and credit impairments.
The company said on Tuesday that revenue for the quarter rose 6.41% to RM445.18 million from RM418.36 million in 2010.
Loss per share for the quarter was 11.88 sen compared to earnings per share of 5.69 sen a year earlier, while net assets per share was RM1.69.
There was no dividend declared or recommended during quarter under review.
However, KNM said it had adopted a dividend policy of distributing at least 50% of its consolidated net attributable after tax profit (subject to the availability of distributable reserves and compliance of financial covenants) with effect from financial year ending Dec 31, 2012.
For the nine months ended Sept 30, KNM posted net loss RM86.42 million compared to net profit RM110.57 million in 2010, while its revenue grew 19% to RM1.4 billion from RM1.17 billion.
Reviewing its performance, KNM said the higher revenue in this year was due to higher job recognition.
On its prospects, KNM said notwithstanding its strong order book, the company expects the business environment for the remaining quarter to remain challenging due to global uncertainties.
“However, the board is optimistic that going forward the prospects for the oil & gas industry remains positive,” it said.
Showing posts with label KNM. Show all posts
Showing posts with label KNM. Show all posts
Tuesday, November 22, 2011
Tuesday, October 11, 2011
KNM gets US$200m contract in Sri Lanka from Octagon unit
| Written by Surin Murugiah of theedgemalaysia.com | ||
| Tuesday, 11 October 2011 19:19 |
KUALA LUMPUR: KNM GROUP BHD [] has landed a conditional US$200 million (RM638 million) contract to build a waste to energy plant in Sri Lanka from OCTAGON CONSOLIDATED BHD []’s subsidiary Orizon Renewable Energy (Private) Ltd (ORE).
It said on Tuesday, Oct 11 that its subsidiary KNM Process Systems Sdn Bhd had been awarded the contract to build the plant capacity to process up to 1,000 tons per day of municipal solid waste for generation of a minimum of 40 MW of gross electrical energy in Karadiyana, Thumbowila, Kesbewa, Colombo.
It said the conditional award was subject to among others, the signing of a definitive agreement, based on terms and conditions acceptable to the parties including the financiers of the project by December 2011.
KNM said the project, which involves the generation of renewable energy from municipal solid waste at the Project site covering up to 20 acres of land in Karadiyana, was to be implemented under Public Private Partnership between ORE and the Waste Management Authority of Western Province, an agency under the Government of Sri Lanka.
The company said the project was expected to contribute positively to its earnings for the financial years ending Dec 31, 2012, 2013 and 2014.
KNM Group: Peterborough project delayed
Date: 10/10/2011
 (Oct 10, RM1.20) Maintain underperform with fair value of 70 sen: Last week, KNM announced that it had been prompted by its client that the financial close of its UK Peterborough contract (worth RM2.2 billion) has been delayed to December. As such, the company believes it will be unable to meet its guided FY11 revenue of RM2.2 billion and earnings before interest, taxes, depreciation, and amortisation (Ebitda) earnings of RM270 million. The project involves the development of a biomass and waste recycling centre in the UK using high-end technology. KNM was awarded the engineering, procurement and construction (EPC) contract on Dec 21, 2010. We are not surprised by the announcement as we have noted that the project had yet to achieve financial close by August. The management had previously guided that it would likely be achieved in early 2HFY11. As such, we had postponed the project's earnings contribution to FY12 in our previous note (dated Aug 23, 2011). We reiterate our view that the stock will likely continue to report disappointing earnings. Moreover, it has significant exposure to Europe and the UK, which are at high risk of economic slowdown. As such, we foresee continual volatility in its forward earnings despite its order backlog of RM5.3 billion (of which half is made up of the Peterborough project). We estimate that the Peterborough contract accounts for around 80% of our core FY12 earnings per share (EPS). However, this is based on conservative assumptions that the company secures minimal new wins beyond the project within FY12 and Ebitda margins grow by one percentage point to 9.5% (from our 8.5% assumption for FY11). We maintain our FY11 to FY13 earnings estimates as we had already assumed: (i) the project would kick start in FY12; and (ii) lower than guided revenue and Ebitda earnings of RM1.98 billion and RM168.5 million respectively for FY11. However, we are removing our FY11 dividend per share assumption of two sen, as we believe the company is unlikely to pay a dividend under such difficult conditions. Upside risks to our view include: (i) better than expected margins for contracts executed in the latter part of FY11; and (ii) higher than expected contract wins moving ahead which will significantly increase revenue earnings. The stock has continued to negatively surprise the market, reinforcing our view that the stock deserves to trade at a discount to sector peers. We maintain our fair value of 70 sen per share based on nine times FY12 price earnings ratio. ' RHB Research, Oct 10 This article appeared in The Edge Financial Daily, Ocotber 11, 2011. | ||||||||||
Wednesday, October 5, 2011
本益比過高估價低 科恩馬投資評級看空
（吉隆坡5日訊）儘管科恩馬（KNM，7164，主要板工業）獲得新工程，但價值較現有總值50億令吉訂單小，且開工日期未定，券商維持該股“賣出”評級。
此外，大馬投資研究指出，他們也將調整科恩馬合理價格，因為目前股價已低于早前每股1.20令吉的估價。
該行指出，目前科恩馬以2011財年19倍本益比進行交易，油氣領域的本益比僅17倍，以該公司過去較遜色的盈利紀錄來看，並不符合。
科恩馬昨天獲得八方旺組合（OCTAGON，7109，主要板工業）總值7000萬令吉先進熱量氣化反應器的合約。
科恩馬也是八方旺組合在斯里蘭卡，再生能源發電廠的工程、採購、建築及委外（EPCC）合約的入圍公司。
大馬投資研究相信，雖然化反應器的合約期限是從科恩馬獲訂金開始的22個月內完成，但八方旺組合是否獲得斯里蘭卡政府購電合約才是關鍵。
但分析員認為，即便新工程明年初開工，對科恩馬2012至2013財年的收益預測不會有重大改變。
今日閉市，科恩馬報1.20令吉，起3仙，成交量達707萬3800股。
此外，大馬投資研究指出，他們也將調整科恩馬合理價格，因為目前股價已低于早前每股1.20令吉的估價。
該行指出，目前科恩馬以2011財年19倍本益比進行交易，油氣領域的本益比僅17倍，以該公司過去較遜色的盈利紀錄來看，並不符合。
科恩馬昨天獲得八方旺組合（OCTAGON，7109，主要板工業）總值7000萬令吉先進熱量氣化反應器的合約。
科恩馬也是八方旺組合在斯里蘭卡，再生能源發電廠的工程、採購、建築及委外（EPCC）合約的入圍公司。
大馬投資研究相信，雖然化反應器的合約期限是從科恩馬獲訂金開始的22個月內完成，但八方旺組合是否獲得斯里蘭卡政府購電合約才是關鍵。
但分析員認為，即便新工程明年初開工，對科恩馬2012至2013財年的收益預測不會有重大改變。
今日閉市，科恩馬報1.20令吉，起3仙，成交量達707萬3800股。
Tuesday, October 4, 2011
Octagon awards RM70m gasification plant job to KNM
Written by Joseph Chin of theedgemalaysia.com
Monday, 03 October 2011 19:16
KUALA LUMPUR: OCTAGON CONSOLIDATED BHD [] has awarded a US$22 million (RM70.18 million) contract to KNM GROUP BHD [] to build an advanced thermal gasification reactor.
Octagon said on Monday, Oct 3 its unit Green Energy and TECHNOLOGY [] Sdn Bhd (GreenTech) had sealed a contract with KNM Process Systems Sdn Bhd for the reactor. The contractor would undertake the manufacturing, engineering, installation and pre-commission of the reactor.
GreenTech is undertaking Octagon’s waste to energy business and it had developed the reactor to be used by its subsidiary Orizon Renewable Energy (Private) Ltd for its waste to energy plant in Sri Lanka.
The project involves the generation of renewable energy from municipal solid waste at the project site covering up to 20 acres of land in Karadiyana.
It would be implemented under public private partnership between Orizon and the Waste Management Authority of Western Province, an agency under the Sri Lanka government.
On Sept 12, Octagon announced Orizon had received the letter of intent from the Ceylon Electricity Board to purchase electrical energy generated from Orizon’s waste to energy plant.
KNM Process had also been shortlisted as one of the contractors for the engineering, procurement, CONSTRUCTION [] and commissioning (EPCC) contract for the waste to energy plant in Colombo.
Monday, 03 October 2011 19:16
KUALA LUMPUR: OCTAGON CONSOLIDATED BHD [] has awarded a US$22 million (RM70.18 million) contract to KNM GROUP BHD [] to build an advanced thermal gasification reactor.
Octagon said on Monday, Oct 3 its unit Green Energy and TECHNOLOGY [] Sdn Bhd (GreenTech) had sealed a contract with KNM Process Systems Sdn Bhd for the reactor. The contractor would undertake the manufacturing, engineering, installation and pre-commission of the reactor.
GreenTech is undertaking Octagon’s waste to energy business and it had developed the reactor to be used by its subsidiary Orizon Renewable Energy (Private) Ltd for its waste to energy plant in Sri Lanka.
The project involves the generation of renewable energy from municipal solid waste at the project site covering up to 20 acres of land in Karadiyana.
It would be implemented under public private partnership between Orizon and the Waste Management Authority of Western Province, an agency under the Sri Lanka government.
On Sept 12, Octagon announced Orizon had received the letter of intent from the Ceylon Electricity Board to purchase electrical energy generated from Orizon’s waste to energy plant.
KNM Process had also been shortlisted as one of the contractors for the engineering, procurement, CONSTRUCTION [] and commissioning (EPCC) contract for the waste to energy plant in Colombo.
Tuesday, August 23, 2011
KNM down in active trade on lower 1H earnings
Written by Surin Murugiah of theedgemalaysia.com
Tuesday, 23 August 2011 09:50
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.
KNM 2Q net profit falls 23.25% to RM10.86m
Written by Surin Murugiah of theedgemalaysia.com
Monday, 22 August 2011 18:09
KUALA LUMPUR: KNM GROUP BHD [] 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 units.
It said on Monday, Aug 22 that 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.
On its prospects for the year, KNM said it expects increase improvement in certain operating units and as such croup’s profitability for the year 2011 would improve, barring any unforeseen circumstances.
Tuesday, 23 August 2011 09:50
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.
KNM 2Q net profit falls 23.25% to RM10.86m
Written by Surin Murugiah of theedgemalaysia.com
Monday, 22 August 2011 18:09
KUALA LUMPUR: KNM GROUP BHD [] 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 units.
It said on Monday, Aug 22 that 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.
On its prospects for the year, KNM said it expects increase improvement in certain operating units and as such croup’s profitability for the year 2011 would improve, barring any unforeseen circumstances.
Monday, August 22, 2011
KNM has bottomed out
Written by Financial Daily
Friday, 19 August 2011 10:56
KNM Group Bhd
(Aug 18, RM1.56)
Maintain buy at RM1.57 with revised target price of RM2.10 (from RM3.35): Given the slower-than-expected rollout of EnergyPark Peterborough, we understand the client has not secured financial close, we trim FY11 to FY13F gross profit margins by 1.2% to 1.9%. Consequently, FY11 to FY13F earnings were cut by 17% to 32%, also indicating a slower rollout. We had initially assumed 15% completion by FY11, but now push back commencement to FY12, which will see 23% earnings contribution. We remain confident the project will take off given that it is a renewable energy project, in line with the UK government’s commitment to sourcing 15% of its energy from renewable sources by 2020.
We expect 2QFY11 earnings to be similar to 1QFY11, reflecting sluggish margins for old contracts secured in FY09 and 1H10. As highlighted in our previous reports, we expect earnings recovery to be more pronounced in 2HFY11, especially 4QFY11 with the completion of old contracts. KNM’s tender book is still hovering at RM17 billion, indicating a still buoyant outlook.
Following the earnings downgrade, we cut our target price to RM2.10, pegged to 12 times FY12 earnings per share, in line with the sector average.
The recent selldown on an expectedly weak global economic outlook has provided an opportunity to accumulate KNM shares on weakness. KNM’s share price has dropped to a two-year low despite its better prospects compared with the last two years. Earnings visibility remains supported by a RM5.5 billion order book as at July 2011 (against RM2.4 billion in July 2010), implying 3.5 times book-to-bill ratio. We remain bullish on KNM’s long-term prospects. The full impact of normalised margins will be reflected in FY12. — HwangDBS Vickers Research, Aug 18
This article appeared in The Edge Financial Daily, August 19, 2011.
Friday, 19 August 2011 10:56
KNM Group Bhd
(Aug 18, RM1.56)
Maintain buy at RM1.57 with revised target price of RM2.10 (from RM3.35): Given the slower-than-expected rollout of EnergyPark Peterborough, we understand the client has not secured financial close, we trim FY11 to FY13F gross profit margins by 1.2% to 1.9%. Consequently, FY11 to FY13F earnings were cut by 17% to 32%, also indicating a slower rollout. We had initially assumed 15% completion by FY11, but now push back commencement to FY12, which will see 23% earnings contribution. We remain confident the project will take off given that it is a renewable energy project, in line with the UK government’s commitment to sourcing 15% of its energy from renewable sources by 2020.
We expect 2QFY11 earnings to be similar to 1QFY11, reflecting sluggish margins for old contracts secured in FY09 and 1H10. As highlighted in our previous reports, we expect earnings recovery to be more pronounced in 2HFY11, especially 4QFY11 with the completion of old contracts. KNM’s tender book is still hovering at RM17 billion, indicating a still buoyant outlook.
Following the earnings downgrade, we cut our target price to RM2.10, pegged to 12 times FY12 earnings per share, in line with the sector average.
The recent selldown on an expectedly weak global economic outlook has provided an opportunity to accumulate KNM shares on weakness. KNM’s share price has dropped to a two-year low despite its better prospects compared with the last two years. Earnings visibility remains supported by a RM5.5 billion order book as at July 2011 (against RM2.4 billion in July 2010), implying 3.5 times book-to-bill ratio. We remain bullish on KNM’s long-term prospects. The full impact of normalised margins will be reflected in FY12. — HwangDBS Vickers Research, Aug 18
This article appeared in The Edge Financial Daily, August 19, 2011.
Thursday, August 11, 2011
KNM downgraded on reduced earnings and PER forecasts
Written by Financial Daily Wednesday, 10 August 2011 11:30
KNM Group Bhd
(Aug 9, RM1.51)
Downgrade to reduce at RM1.58 with revised target price of RM1.32 (from RM2.21): We are downgrading KNM to a “reduce” (from “buy”) with a lower target price (TP) of RM1.32 (from RM2.21) following our 3% to 36% cut in FY11 to FY13 earnings, coupled with a reduced CY12 target price-earnings ratio (PER) of eight times (from 13 times). The sharp 36%/3%/3% cuts in FY11/FY12/FY13 earnings forecasts are mainly due to our expectation of further delay in the commencement of KNM’s RM2.2 billion Peterborough Energy Park engineering, procurement and construction (EPC) work. As the project has yet to reach the financial close at this juncture, we now expect the EPC work to commence in CY12.
We have lowered our target PER for KNM from 13 times CY12 earnings to eight times in view of higher company risk premium and possible earnings/contracts disappointments. We think the street may be overly optimistic on KNM’s FY11 pre-tax profit forecast of RM120 million (70% above Affin’s forecast). KNM has reported RM6 million to RM7 million of quarterly pre-tax profit for the last two quarters and we do not expect a drastic improvement in 2QCY11 as the group is likely to continue billing on its older, lower margin contracts because:
(i) The delay in commencement of Peterborough EPC work is a disappointment. To recap, the Peterborough EPC contract was awarded by Peterborough Renewable Energy Ltd, controlled by a group of local businessmen, in December 2010 to construct a £450 million (RM2.2 billion) energy park. While we remain optimistic and expect the project to commence in FY12, any further delay in financial close will be detrimental to KNM’s share price;
(ii) Possible disappointment in concluding the RM17 billion Gulf Asian Petroleum (GAP) contract. GAP is still in the preliminary project planning stage and it has yet to complete the front-end engineering and design (FEED) study and has not secured the project financing nor entered into any supply and offtake agreements; and (iii) In view of the rising global stock market volatility and economic uncertainties, investors may shun KNM and switch into more defensive stocks, or other oil and gas companies with better earnings visibility.
We are not optimistic on KNM’s immediate term share price outlook in view of these concerns, but we think the group’s strong order book of RM5.5 billion and steep share price correction (-44% year-to-date) will help to limit the downside to around our TP of RM1.32. Earnings disappointment and downgrade in street forecast is a key de-rating catalyst. Note that our revised FY11/FY12 forecasts are 46% and 27% below street. — Affin IB Research, Aug 9
This article appeared in The Edge Financial Daily, August 10, 2011.
KNM Group Bhd
(Aug 9, RM1.51)
Downgrade to reduce at RM1.58 with revised target price of RM1.32 (from RM2.21): We are downgrading KNM to a “reduce” (from “buy”) with a lower target price (TP) of RM1.32 (from RM2.21) following our 3% to 36% cut in FY11 to FY13 earnings, coupled with a reduced CY12 target price-earnings ratio (PER) of eight times (from 13 times). The sharp 36%/3%/3% cuts in FY11/FY12/FY13 earnings forecasts are mainly due to our expectation of further delay in the commencement of KNM’s RM2.2 billion Peterborough Energy Park engineering, procurement and construction (EPC) work. As the project has yet to reach the financial close at this juncture, we now expect the EPC work to commence in CY12.
We have lowered our target PER for KNM from 13 times CY12 earnings to eight times in view of higher company risk premium and possible earnings/contracts disappointments. We think the street may be overly optimistic on KNM’s FY11 pre-tax profit forecast of RM120 million (70% above Affin’s forecast). KNM has reported RM6 million to RM7 million of quarterly pre-tax profit for the last two quarters and we do not expect a drastic improvement in 2QCY11 as the group is likely to continue billing on its older, lower margin contracts because:
(i) The delay in commencement of Peterborough EPC work is a disappointment. To recap, the Peterborough EPC contract was awarded by Peterborough Renewable Energy Ltd, controlled by a group of local businessmen, in December 2010 to construct a £450 million (RM2.2 billion) energy park. While we remain optimistic and expect the project to commence in FY12, any further delay in financial close will be detrimental to KNM’s share price;
(ii) Possible disappointment in concluding the RM17 billion Gulf Asian Petroleum (GAP) contract. GAP is still in the preliminary project planning stage and it has yet to complete the front-end engineering and design (FEED) study and has not secured the project financing nor entered into any supply and offtake agreements; and (iii) In view of the rising global stock market volatility and economic uncertainties, investors may shun KNM and switch into more defensive stocks, or other oil and gas companies with better earnings visibility.
We are not optimistic on KNM’s immediate term share price outlook in view of these concerns, but we think the group’s strong order book of RM5.5 billion and steep share price correction (-44% year-to-date) will help to limit the downside to around our TP of RM1.32. Earnings disappointment and downgrade in street forecast is a key de-rating catalyst. Note that our revised FY11/FY12 forecasts are 46% and 27% below street. — Affin IB Research, Aug 9
This article appeared in The Edge Financial Daily, August 10, 2011.
Tuesday, August 9, 2011
券商下修投資評級 科恩馬溢價風險增
* 財經 09/08/2011 17:22
（吉隆坡9日訊）科恩馬（KNM，7164，主要板工業）溢價風險增加，盈利及合約值恐令人失望，券商下修投資評級至“減持”，目標價同跌至1.32令吉。
艾芬投資銀行今日透過報告說，隨著全球股市愈發波動，投資者或避開科恩馬，轉向其他抗跌性高，或盈利前景穩定的油氣公司。
該行認為，市場對于該公司2011財年盈利預估過于樂觀，稅前淨利預估達1.2億令吉，超出艾芬投資銀行預估70%。
“科恩馬最近兩季，僅錄得600萬、700萬令吉的稅前淨利，我們並不預期接下來2季會出現戲劇化進展，畢竟該公司仍持續清算低賺幅合約。”
艾芬投資銀行基于溢價風險趨升，加上合約表現恐失利，下修2012曆年本益比（PE）目標，由13倍調低至8倍。
“我們也調低2011至2013財年盈利預估，單是2011財年已砍36%，主要是去年底獲頒的英國彼得伯勒能源公園（Peterborough Energy Park）設計、 採購和施工（EPC）合約，料延期動工。”
該行透露，上述工程融資問題仍未解決，原先預計今年下半年可動工，依情況看來料展延至明年。
另外，科恩馬上月底與海灣亞洲石油（Gulf Asian Petroleum）簽署暫定工程協議，最終或令人失望。
“上述工程仍處初步階段，無論是融資、研究或供銷協議都還未定案。”
基于種種原因，艾芬投資銀行下調該公司投資建議至“減持”，目標價也下修至1.32令吉。
閉市時，科恩馬報1.51令吉，跌7仙，成交量1860萬8000股。
（吉隆坡9日訊）科恩馬（KNM，7164，主要板工業）溢價風險增加，盈利及合約值恐令人失望，券商下修投資評級至“減持”，目標價同跌至1.32令吉。
艾芬投資銀行今日透過報告說，隨著全球股市愈發波動，投資者或避開科恩馬，轉向其他抗跌性高，或盈利前景穩定的油氣公司。
該行認為，市場對于該公司2011財年盈利預估過于樂觀，稅前淨利預估達1.2億令吉，超出艾芬投資銀行預估70%。
“科恩馬最近兩季，僅錄得600萬、700萬令吉的稅前淨利，我們並不預期接下來2季會出現戲劇化進展，畢竟該公司仍持續清算低賺幅合約。”
艾芬投資銀行基于溢價風險趨升，加上合約表現恐失利，下修2012曆年本益比（PE）目標，由13倍調低至8倍。
“我們也調低2011至2013財年盈利預估，單是2011財年已砍36%，主要是去年底獲頒的英國彼得伯勒能源公園（Peterborough Energy Park）設計、 採購和施工（EPC）合約，料延期動工。”
該行透露，上述工程融資問題仍未解決，原先預計今年下半年可動工，依情況看來料展延至明年。
另外，科恩馬上月底與海灣亞洲石油（Gulf Asian Petroleum）簽署暫定工程協議，最終或令人失望。
“上述工程仍處初步階段，無論是融資、研究或供銷協議都還未定案。”
基于種種原因，艾芬投資銀行下調該公司投資建議至“減持”，目標價也下修至1.32令吉。
閉市時，科恩馬報1.51令吉，跌7仙，成交量1860萬8000股。
Wednesday, August 3, 2011
KNM: Patience is a virtue
Written by Financial Daily Tuesday, 02 August 2011 11:13
KNM Group Bhd
(Aug 1, RM1.83)
Maintain buy at RM1.82 with revised target price of RM2.68 (from RM3.20): We visited KNM’s management recently to get more clarification about the company’s potential engineering, procurement, construction and commissioning (EPCC) contracts and equity participation in the proposed RM17 billion Integrated Petroleum Complex (IPC) at Teluk Ramunia.
Management indicated that nothing has been confirmed and they are now awaiting Gulf Asian Petroleum Sdn Bhd (GAP), the project developer, to finalise the project details. This includes, for instance, the sources of crude oil supply for its refinery (which we believe will be secured from the Middle East).
We were told that GAP has already completed the front end engineering design (FEED) stage for the IPC. KNM’s management also guided that the potential EPCC contracts awarded directly to KNM might be worth about RM3 billion (instead of RM17 billion) as most of the jobs will then be outsourced to third parties.
Besides, other prospective income might be recurring in nature, generated from the oil storage facility and plant maintenance jobs.
Revenue recognition of the RM2.2 billion contract awarded by Peterborough Renewable Energy Ltd has been delayed further from the revised target of starting July 2011. We have revised our assumption for the contracts realisation date to 4QFY11. This project accounts for 40% of KNM’s outstanding order book, so we believe it is an important catalyst to re-rate KNM.
As we are still concerned over the viability and funding accessibility of the aforesaid IPC project, we have yet to factor in any profit contribution. We have cut our FY11 and FY12 earnings per share (EPS) by 33.8% and 16.2% to 12.6 sen and 19.1 sen after taking into account: (i) further delay in the Peterborough project; and (ii) lower FY11 and FY12 average gross margin assumption of 19% and 20% from 21% and 22% previously, given lower management guidance.
KNM’s 2QFY11 results will be released on Aug 22 and are expected to remain weak. Management expects earnings to recover only in 2HFY11.
Maintain “buy” with revised target price of RM2.68, based on 14 times revised 2012 EPS. We believe the company’s current outstanding order book of RM5.5 billion and the fact that margin tends to improve after clearing its lower-yield order backlog secured in 2009 and 1H10, might cushion further downside. We also expect buying interest in KNM to revive should the Peterborough project start contributing. Any positive news flow regarding the IPC is also a plus to KNM. — MIDF Research, Aug 1
This article appeared in The Edge Financial Daily, August 2, 2011.
KNM Group Bhd
(Aug 1, RM1.83)
Maintain buy at RM1.82 with revised target price of RM2.68 (from RM3.20): We visited KNM’s management recently to get more clarification about the company’s potential engineering, procurement, construction and commissioning (EPCC) contracts and equity participation in the proposed RM17 billion Integrated Petroleum Complex (IPC) at Teluk Ramunia.
Management indicated that nothing has been confirmed and they are now awaiting Gulf Asian Petroleum Sdn Bhd (GAP), the project developer, to finalise the project details. This includes, for instance, the sources of crude oil supply for its refinery (which we believe will be secured from the Middle East).
We were told that GAP has already completed the front end engineering design (FEED) stage for the IPC. KNM’s management also guided that the potential EPCC contracts awarded directly to KNM might be worth about RM3 billion (instead of RM17 billion) as most of the jobs will then be outsourced to third parties.
Besides, other prospective income might be recurring in nature, generated from the oil storage facility and plant maintenance jobs.
Revenue recognition of the RM2.2 billion contract awarded by Peterborough Renewable Energy Ltd has been delayed further from the revised target of starting July 2011. We have revised our assumption for the contracts realisation date to 4QFY11. This project accounts for 40% of KNM’s outstanding order book, so we believe it is an important catalyst to re-rate KNM.
As we are still concerned over the viability and funding accessibility of the aforesaid IPC project, we have yet to factor in any profit contribution. We have cut our FY11 and FY12 earnings per share (EPS) by 33.8% and 16.2% to 12.6 sen and 19.1 sen after taking into account: (i) further delay in the Peterborough project; and (ii) lower FY11 and FY12 average gross margin assumption of 19% and 20% from 21% and 22% previously, given lower management guidance.
KNM’s 2QFY11 results will be released on Aug 22 and are expected to remain weak. Management expects earnings to recover only in 2HFY11.
Maintain “buy” with revised target price of RM2.68, based on 14 times revised 2012 EPS. We believe the company’s current outstanding order book of RM5.5 billion and the fact that margin tends to improve after clearing its lower-yield order backlog secured in 2009 and 1H10, might cushion further downside. We also expect buying interest in KNM to revive should the Peterborough project start contributing. Any positive news flow regarding the IPC is also a plus to KNM. — MIDF Research, Aug 1
This article appeared in The Edge Financial Daily, August 2, 2011.
Wednesday, July 27, 2011
More details needed on project returns of RM17b petro-chemical plant
Thursday July 28, 2011
By THOMAS HUONG
PETALING JAYA: More clarification is needed on the off-takers or customers of a proposed RM17bil integrated petro-chemical complex in Teluk Ramunia, Johor, according to research analysts.
Analysts contacted by StarBiz yesterday said there were concerns over the project financing needed.
“The question is can KNM Group Bhd, Zecon Bhd and Gulf Asian Petroleum Sdn Bhd (GAP) get the required financing for the project? In a project of this size, financial institutions and lenders will need details on confirmed off-takers or customers and also the return on investments,” said an analyst.
KNM and Zecon had on Monday said in Bursa Malaysia filings that preliminary deals had been signed with GAP to build the integrated petro-chemical complex.
KNM said the engineering, procurement, construction and commissioning contracts were for a 150,000/200,000 barrels per day petroleum refinery and 400,000/525,000 million tonnes per annum polypropylene unit and also, a petroleum storage terminal facility.
Under the deal, KNM and Zecon together with an international Korean or Chinese contractor will form a consortium to undertake the petroleum refinery and polypropylene unit projects.
The consortium will take up to 20% equity in GAP, which is estimated at US$180mil (RM540mil).
The petroleum refinery and polypropylene unit projects will be funded by 30% equity and the balance through project financing using export credit agencies or other financial instruments including sukuk issuance.
As for the petroleum product storage terminal facility project, GAP will arrange for a financial guarantee from a local investment fund for up to RM1.5bil during the construction period, to be converted into a long-term loan thereafter, and a facilitation fund of up to RM300mil, while KNM will arrange a sukuk issuance of up to RM1.5bil to cover project financing during construction.
KNM said that concerning the petroleum product storage terminal facility, GAP had entered into preliminary deals with international suppliers of crude oil and petroleum products, which are subject to financial close for the supply and off-take agreements.
Meanwhile, in a recent note, ECM Libra Investment Research upgraded the stock of KNM to a “Trading Buy” from “Hold”, with a target price of RM2.25.
However, the ECM Libra note said at this juncture, KNM might have too much on its plate and, as such, there were concerns over its project execution capabilities and margins.
“Its order book amounts to RM5.4bil and projects in Uzbekistan and the United Kingdom have only just taken off. Also, we estimate that the group has some RM1bil of older orders to clear off that was accumulated over the previous financial year.”
HwangDBS Vickers Research noted that this would be the single largest contract ever for KNM, boosting its order backlog to RM14bil.
The HwangDBS Vickers Research note maintained a buy call for KNM's stock at RM1.75 and a 12-month price target of RM3.35.
An OSK Research note said that due to past events, there were doubts on whether the project would take off.
“In March 2008, Qatar-based Gulf Petroleum Ltd's plans to construct a US$5bil oil and gas complex in Malaysia petered out even though it had earlier signed an agreement with the Malaysian Government. Other than that, we believe that securing the project financing itself has some uncertainty given the huge sum needed,” said OSK Research, which maintained its buy call on KNM's stock at RM1.75, and a fair value of RM2.80.
The share prices of KNM and Zecon have jumped since the announcement of the deal on Monday, and were among the most actively traded on Bursa Malaysia yesterday.
In the past two days, KNM's share price rose from RM1.75 to close at RM1.99 yesterday.
Zecon's share price jumped by 85% over two days to close at 89 sen yesterday.
Zecon's warrants rose by 300% over two days to close at 56 sen yesterday.
Meanwhile, oil and gas industry professionals say there should not be a situation of overcapacity in the oil refinery industry when new refineries come online in the next few years.
A senior manager in the oil and gas industry said there was a need for Malaysia to build more refineries.
“There is no question of overcapacity now, as some players with petrol retail and service stations are buying from Singapore. About 30%-40% of fuel sold across the country comes from Singapore,” said the senior manager.
Presently, Malaysia has five refineries with a total capacity of 560,000 barrels per day.
Petroliam Nasional Bhd (Petronas) is investing in a RM60bil integrated refinery and petrochemical complex in Pengerang, Johor, which is expected to be commissioned by the end of 2016.
Known as the Refinery and Petrochemicals Integrated Development (Rapid) project, it will comprise a crude oil refinery with a 300,000 barrels per day capacity, a naphtha cracker that will produce about three million tonnes of ethylene, propylene, C4 and C5 olefins per year, and a petrochemicals and polymer complex.
Earlier this month, it was reported in a local daily that Kedah Mentri Besar Datuk Seri Azizan Abdul Razak stated the proposed RM83bil Kedah Hydrocarbon Hub project in Sungai Limau, Yan would be carried out as planned.
Two years ago, Merapoh Resources Corp Sdn Bhd had announced that the US$10bil (RM30bil) oil refinery in Yan would be the biggest in the country, with a production capacity of 350,000 barrels per day, and was due to be completed by 2013 or early 2014.
Also, Gulf Petroleum (M) Sdn Bhd (GPLM) and several foreign consortiums agreed in May this year to jointly develop a RM17bil integrated petro-chemical complex in Port Dickson, Negri Sembilan which would have a production capacity of 150,000 barrels per day when it is completed in 2015.
Tuesday, July 26, 2011
OSK keeps 'trading buy' on KNM Group
OSK keeps 'trading buy' on KNM Group
Date: 26/07/2011| Source | : | OSK | ||||||||
| Stock | : | KNM | Price Target | : | 2.80 | | | Price Call | : | TRADING BUY | |
| Last Price | : | 1.97 | | | Upside/Downside | : |  +0.83 (42.13%) | ||||
KNM is undertaking the refinery/polypropylene and storage projects at Teluk Ramunia, Johor, and the research house said this could be a potentially positive contribution to the existing orderbook.
"Currently, we believe KNM Group's orderbook is still above RM5 billion while the tenderbook is over RM17 billion," OSK Research said.
KNM announced yesterday that it and Zecon Bhd have entered into two agreements with Gulf Asian Petroleum SB (GAP)for the refinery/polypropylene and storageprojects at Teluk Ramunia, Johor.
The company said it would form a consortium with Zecon Bhd and Korean/Chinese contractors to undertake the engineering, procurement and construction (EPC) of the projects.
But more information is needed to gauge the financial impact on KNM, according to OSK Research.
"KNM will need to arrange a sukuk issuance of up to RM1.5 billion to cover the project financing during construction, while GAP will arrange a financial guarantee from a local investment fund of up to RM1.5 billion during the construction period, to be converted into a long-term loan thereafter and a facilitation fund of up to RM300 million," OSK Research said.
OSK Research believes KNM would have the financial muscle to take up the preliminary investment of RM240 million as its net gearing is still below 1x.
"Based on its 1QFY11 results, it had net debts of RM534.6 million with total debts of RM1 billion and cash equivalents of RM479.5 million. Hence, this also led to a net gearing of 0.3 times," OSK Research said.
Although these projects could potentially contribute positively to its FY12-15 earnings, OSK Research said it is keeping the FY12 forecast unchanged for now, pending more financial guidance from management.
"Also, due to past events, we harbour some doubts on whether the project will take off," it added.
Other than that, OSK Research believes that securing the project financing itself has some uncertainty given the huge sum needed. -- Bernama
Monday, July 25, 2011
KNM Research House Target Price
| A record high order book Source | : | HWANGDBS | ||||||||
| Stock | : | KNM | Price Target | : | 3.35 | | | Price Call | : | BUY | |
| Last Price | : | 1.85 | | | Upside/Downside | : | +1.50 (81.08%) | ||||
(June 14, RM1.91)
Maintain buy at RM1.90 with target price of RM3.35: At the analysts' briefing on Monday, the management remained optimistic of a recovery in 2011. As at May 2011, KNM had secured RM1.5 billion worth of new orders, taking its order backlog to RM5.5 billion. Its tender book remains strong at RM17 billion, which means it is likely to meet our FY11 target order win of RM3 billion given its historical success rate of 20%. We learned of delays at its RM2.2 billion EnergyPark Peterborough project and the management now expects it to commence next month.
The weaker-than-expected 1Q11 earnings were largely due to recognition of low margin jobs secured in FY09 and early FY10. KNM still has RM1 billion worth of old contracts in its backlog, which we expect to be exhausted by FY11. We cut FY11F earnings by 15% because the old projects, which will account for circa 50% of revenue this year, will yield lower margins. However, KNM's prospects remain buoyant, as its large order book will support long-term earnings visibility. Hence, we are retaining our forecasts for FY12.
KNM is currently trading at an attractive valuation of only eight times FY12 EPS, making it one of the cheapest oil and gas stocks in Malaysia. The recent
selldown by investors due to disappointing 1Q11 earnings is excessive. We remain bullish on KNM's long-term prospect and the full impact of normalised margins will be reflected in FY12. We recommend investors to buy on weakness. ' HwangDBS Vickers, June 14
This article appeared in The Edge Financial Daily, June 15, 2011.
Brace for further headwinds
Date: 14/06/2011| Source | : | MAYBANK | ||||||||
| Stock | : | KNM | Price Target | : | 2.00 | | | Price Call | : | HOLD | |
| Last Price | : | 1.86 | | | Upside/Downside | : | +0.14 (7.52%) | ||||
(June 14, RM1.91)
Downgrade to hold at RM1.90 with revised target price of RM2 (from RM4.35): Our initial forecasts are too optimistic and the management is guiding for lower profits as earnings could remain weak over the next few quarters. This is disappointing for we had expected earnings to rebound on the new orders secured in the past 12 months. The financing for the Peterborough project is still unresolved. We lower our target price to RM2 based on reduced PE multiple target of 10 times (previously 14 times) as we also cutearnings forecasts.
Although order book build-up momentum has improved, earnings will remain depressed over the next nine months as KNM still needs to deliver RM1 billion worth of jobs committed under razor-thin earnings before interest and tax (Ebit) margins (5%-8%). These low margin orders account for 18% of its RM5.5 billion outstanding order book as at May 2011. Consequently, internal targets for 2011 revenue and Ebitda have been lowered by 8% and 26% to RM2.2 billion and RM270 million respectively.
We have cut our earnings forecasts by 18% to 35% for 2011-13, taking into account the downbeat prospect in the short mid-term period. We now expect KNM to deliver a lower net profit of RM139 million for 2011, RM190 million for 2012 and RM300 million for 2013. This is based on lower utilisation rate assumptions of 95,000 tonnes per annum for 2011 (-5%) and 100,000 tonnes per annum for 2012 (-9%) and reduced Ebit margin assumptions of 12.3% (-3.4 percentage points) and 14.1% (-4.1 percentage points) for 2011-12.
Its share price has fallen 25% post the poor 1QFY11 results which were sub-par. Its 1QFY11 net profit of RM19 million made up just 9% of our earlier full-year forecast, but this was aided by tax incentives (+RM18 million) which partially offset weak margins (4.1% Ebit, -1.3 percentage points quarter-on-quarter). While theshare price should have by now substantially priced in the lower earnings expectations for the near term, the upside will be capped by the negative outlook surrounding its earnings deliverability. We reiterate that top line recovery is visible but KNM needs to deliver its normalised margins on the bottom line to rerate. ''' Maybank IB, June 14
This article appeared in The Edge Financial Daily, June 15, 2011.
KNM remains a Buy at HDBSVR
Date: 14/06/2011| Source | : | HWANGDBS | ||||||||
| Stock | : | KNM | Price Target | : | 3.35 | | | Price Call | : | BUY | |
| Last Price | : | 1.87 | | | Upside/Downside | : | +1.48 (79.14%) | ||||
It said on Tuesday, June 14 KNM which is currently trading at attractive valuation of only 8x FY12 EPS, making it one of the cheapest O&G stocks in Malaysia.
'The recent sell-down by investors, due to disappointing 1Q11 earnings, is excessive. We remain bullish on KNM's long-term prospect and the full impact of normalised margins will be reflected in FY12. We recommend investors to buy on weakness,' it said
KNM, Zecon in RM17b petroleum complex deal
Tuesday July 26, 2011
By THOMAS HUONG
PETALING JAYA: KNM Group Bhd and Zecon Bhd signed preliminary deals worth RM17bil in total with Gulf Asian Petroleum Sdn Bhd (GAP) yesterday to build an integrated petro-chemical complex in Teluk Ramunia, Johor.
In a Bursa Malaysia filing yesterday, KNM said that the engineering, procurement, construction and commissioning contracts were for a 150,000/200,000 barrels per day petroleum refinery and 400,000/525,000 million tonnes per annum polypropylene unit with a total project value of US$5bil (RM15bil) and also, a RM2bil petroleum storage terminal facility comprising four terminals with a total storage capacity of 2.328 million cu m.
GAP is 50%-owned by Mubadala Capital Sdn Bhd (MCSB) and the balance owned by Abdul Aziz Hamad Al-Dulaimi who is the president of Gulf Petroleum Ltd, an integrated oil and gas group based in Doha, Qatar.
MCSB's controlling shareholder is Datuk Zainal Abidin Ahmad, who is also the group managing director and chief executive officer and controlling shareholder of Zecon.
Under the deal, KNM Group and Zecon together with an international Korean or Chinese contractor will form a consortium to undertake the petroleum refinery and polypropylene unit projects.
The consortium will take up to 20% equity in GAP, which is estimated at US$180mil (RM540mil).
The petroleum refinery and polypropylene unit projects will be funded by 30% equity and the balance through project financing using export credit agencies or other financial instruments including sukuk issuance. The facilities are due for completion in 40 months from the financial close of the deal, which should be finalised within the next three months.
Meanwhile, another consortium will be formed by KNM Group and Zecon for the petroleum product storage terminal facility project via a special purpose vehicle (SPV) company.
KNM Group plans to take up to 30% equity in the SPV company, and the balance will be held by GAP and its nominated parties. The SPV has a estimated equity value of RM200mil.
Also, KNM and GAP will form a joint-venture company to undertake the operations and maintenance of the facilities upon project completion for 25 years, with a reputable operator as a partner in the first five years.
The petroleum product storage terminal facility is due to be completed in 18 months from the financial close of the deal, which should be finalised within the next three months.
GAP will arrange for a financial guarantee from a local investment fund for up to RM1.5bil during the construction period, to be converted into a long-term loan thereafter, and a facilitation fund of up to RM300mil, while KNM will arrange a sukuk issuance of up to RM1.5bil to cover project financing during construction.
The Johor state government has given its approval for 650 acres in Teluk Ramunia for the projects.
GAP, which has appointed Evercore Partners New York as its financial adviser, is in discussion with the Johor state government concerning its equity participation which has yet to be finalised.
The projects are expected to contribute positively to both KNM Group and Zecon's earnings for the next four financial years. Approval from Zecon shareholders will be required for the deals, and its proposed investments in the equity of GAP and the SPV company as it is a related-party transaction.
Thursday, June 30, 2011
KNM eyes South Africa as stepping stone for West Africa foray
Written by Kamarul Azhar Thursday, 30 June 2011 10:50
SERI KEMBANGAN: KNM Group Bhd (KNM) has formed a joint venture with a subsidiary of Aveng Group, a leading infrastructure developer in South Africa, to enable KNM to tap the potential of the fast-growing oil and gas industry in the western Africa region.
In the past, KNM exported its process equipments to various companies from the African continent for the exploration and processing of O&G there. Now, managing director Lee Swee Eng said the group intends to set up an operation base in South Africa to better serve the region’s O&G sector. Total investment committed by KNM in the joint-venture company is about RM17 million.
“Our intention is to use that as a stepping stone to enter the West African region. The West African region has quite a lot of potential for O&G. Currently we have no projects in the country, but we have been following some projects in the region such as Angola, Algeria, Nigeria and also Mauritania,” Lee said.
According to the group’s senior corporate development manager Michael Lee, the joint-venture company is setting up a process equipment manufacturing plant in South Africa so that it doesn’t have to export from its plants in Malaysia or elsewhere for projects implemented in the region. The manufacturing plant, he said, would be set up in either a leased building or to build from scratch, as the plan has not yet been finalised.
KNM expects the overseas projects to contribute the most to its tender book, Lee said. He added that almost 90% of the group’s RM5.5 billion order backlog has been from overseas markets, with the group having secured several big ticket projects such as in Peterborough, UK and Uzbekistan.
However, with the renewed interest and investment activity in the domestic O&G industry especially in the downstream sector, Lee said the group stands a good chance in securing some of these projects because of its standing as the leading process equipment manufacturer for the O&G industry in Malaysia.
“Obviously Malaysia has been quite quiet for us in the last few years because there has been not much activity in Malaysia where we are strong in, besides the regular boys in the offshore side.
“Now with the investment from Petronas for Rapid in Johor, with some other projects coming up in Sabah, fertiliser and urea plant, we think KNM stands a good chance in winning some of those projects because among the local companies we are the leading player in this business,” he said.
For the year ahead, Lee said the group expects to chart a better year compared with 2010, as the group is expected to be busy throughout the year with its order backlog at RM5.5 billion as at end of May 2011, as well as a tender book of RM17 billion which is higher than last year’s RM11 billion.
“I think generally the outlook for KNM is looking better than 2010, we have a really strong order backlog and the market has also rebounded back with the price of oil in the range of US$90 (RM272.70) per barrel, there is of course more activity in the industry sector,” Lee said after the group’s AGM yesterday.
Lee is confident that the group also will see a busy 2012, with some of the projects stretching until 2014 such as the project in Peterborough, UK and also in Uzbekistan, which stretches for two years and four years respectively.
According to Lee, the project in Peterborough is delayed because the project owner hasn’t completed the funding required for the project to take off.
“Definitely we are hoping this year to be better… even if you say that the UK project is delayed, there is more than enough order backlog for us to sustain. Total order backlog of RM5.5 billion, if you take out UK project (RM2.2 billion) then you are still looking at RM3.3 billion of order backlog, which is strong compared with our previous years,” he explained.
This article appeared in The Edge Financial Daily, June 30, 2011.
SERI KEMBANGAN: KNM Group Bhd (KNM) has formed a joint venture with a subsidiary of Aveng Group, a leading infrastructure developer in South Africa, to enable KNM to tap the potential of the fast-growing oil and gas industry in the western Africa region.
In the past, KNM exported its process equipments to various companies from the African continent for the exploration and processing of O&G there. Now, managing director Lee Swee Eng said the group intends to set up an operation base in South Africa to better serve the region’s O&G sector. Total investment committed by KNM in the joint-venture company is about RM17 million.
“Our intention is to use that as a stepping stone to enter the West African region. The West African region has quite a lot of potential for O&G. Currently we have no projects in the country, but we have been following some projects in the region such as Angola, Algeria, Nigeria and also Mauritania,” Lee said.
According to the group’s senior corporate development manager Michael Lee, the joint-venture company is setting up a process equipment manufacturing plant in South Africa so that it doesn’t have to export from its plants in Malaysia or elsewhere for projects implemented in the region. The manufacturing plant, he said, would be set up in either a leased building or to build from scratch, as the plan has not yet been finalised.
KNM expects the overseas projects to contribute the most to its tender book, Lee said. He added that almost 90% of the group’s RM5.5 billion order backlog has been from overseas markets, with the group having secured several big ticket projects such as in Peterborough, UK and Uzbekistan.
However, with the renewed interest and investment activity in the domestic O&G industry especially in the downstream sector, Lee said the group stands a good chance in securing some of these projects because of its standing as the leading process equipment manufacturer for the O&G industry in Malaysia.
 |
| Lee: We intend to set up an operation base in South Africa to better serve the region's O&G sector. |
“Now with the investment from Petronas for Rapid in Johor, with some other projects coming up in Sabah, fertiliser and urea plant, we think KNM stands a good chance in winning some of those projects because among the local companies we are the leading player in this business,” he said.
For the year ahead, Lee said the group expects to chart a better year compared with 2010, as the group is expected to be busy throughout the year with its order backlog at RM5.5 billion as at end of May 2011, as well as a tender book of RM17 billion which is higher than last year’s RM11 billion.
“I think generally the outlook for KNM is looking better than 2010, we have a really strong order backlog and the market has also rebounded back with the price of oil in the range of US$90 (RM272.70) per barrel, there is of course more activity in the industry sector,” Lee said after the group’s AGM yesterday.
Lee is confident that the group also will see a busy 2012, with some of the projects stretching until 2014 such as the project in Peterborough, UK and also in Uzbekistan, which stretches for two years and four years respectively.
According to Lee, the project in Peterborough is delayed because the project owner hasn’t completed the funding required for the project to take off.
“Definitely we are hoping this year to be better… even if you say that the UK project is delayed, there is more than enough order backlog for us to sustain. Total order backlog of RM5.5 billion, if you take out UK project (RM2.2 billion) then you are still looking at RM3.3 billion of order backlog, which is strong compared with our previous years,” he explained.
This article appeared in The Edge Financial Daily, June 30, 2011.
KNM aims for RM3.4bil in new orders
Thursday June 30, 2011
By Leong Hung Yee
SERI KEMBANGAN: KNM Group Bhd, which has an order backlog of RM5.5bil, expects to secure at least 20% of the RM17bil worth of projects it is tendering, according to executive chairman/CEO Lee Swee Eng.“Based on our track record, we have a success rate of 25% to 30% in 2008. However, in the past two years the market has become increasingly competitive and our success rate now is about 20%. With 20%, we have a prospect of adding RM3.4bil in new orders,” he told reporters after its AGM yesterday.
He said last year its tenderbook stood at RM11bil and the company was “bidding projects everyday”.
Lee said more than 90% of its order backlog of RM5.5bil were from overseas and would only be reflected on account gradually. He explained that 2009 projects were only reflected in its account last financial year ended Dec 31, 2010 (FY10).
On its prospect for the current FY11, Lee said the company was expecting a “better year” than last year as its large order book would support long term earnings visibility. “The market has rebounded and oil prices are in the range of US$90 a barrel. There are more activities (in the oil and gas industry),” he said.
Lee said that its previous projects were mainly between 12- and 18-month jobs but it was not looking at providing total solutions for clients as those jobs would be two to four years.
“The visibility is better. We are looking at improving out margin. Selling process equipment alone is very tough as the market is becoming more competitive now,” he added. KNM reported a net profit of RM19mil in the first quarter to March 31, 2011 against RM40.3mil a year ago. Revenue, however was higher at RM413mil in the first quarter to March 31, 2010 versus RM373.3mil previously.
The poor numbers were affected by a case of low-margin older backlog orders.
To a question, Lee said the company did not have a business model with recurring income. However, he said the company was venturing into business in services area. “It (services) is not a recurring income but it is more stable because it is repetitive,” he explained, adding that there would be a “ramp up” time for its projects to be reflected on its account.
With more than enough backlog order to process, KNM expects its second half of the year to be better. “We will be quite busy for the next one year. Our backlog will stretch until 2014 and the add on of RM3bil from tenderbook will make us busy,” Lee said.
As at Dec 31, 2010, KNM has a cash and cash equivalents of RM286.5mil would “deliberate” a dividend policy, said Lee, adding that there were some requests by its shareholders. He pointed out that the company had been paying dividend consistently.
Monday, May 30, 2011
KNM skids to RM2.15, lowest since mid-December
Written by Joseph Chin of theedgemalaysia.com
Friday, 27 May 2011 15:52
KUALA LUMPUR: KNM GROUP BHD [] came under selling pressure in late afternoon on Friday, May 27, with the shares falling to a low of RM2.15, the lowest since Dec 13, 2010.
At 3.38pm, it was down 38 sen to RM2.15 with 73.09 million shares done.
The FBM KLCI rose 6.33 points to 1,547.27. Turnover was 635.06 million shares done valued at RM1.09 billion. The broader market displayed signs of weakening further, with 467 losers to 251 gainers and 299 stocks unchanged.
RHB Research Institute said KNM 1Q earnings were significantly below expectations due to legacy contracts.
“We have downgraded our call on the stock to Underperform based on 12x target PER (down from 15x) on revised FY12 EPS of 19 sen,” it said.
In the 1Q, its earnings fell to RM19.01 million from RM40.33 million a year ago.
OSK Research said KNM’s 1QFY11 results were below consensus and its expectations, making up 8% and 9% of the FY11 forecasts respectively.
“Overall, although there was improvement in its overall business activities, these remained slow, resulting in the company making a minimal PBT of only RM6.3 million, which was quite close to the RM6.9 million generated in 4QFY10. Also, its performance this quarter was boosted by the utilisation of tax incentives from Borsig’s acquisition amounting to RM12.8 million (4QFY10 of RM14.0 million),” it said.
Written by Joseph Chin of theedgemalaysia.com Friday, 27 May 2011 09:11
KUALA LUMPUR: Shares of KNM GROUP BHD [] fell in early trade on Friday, May 27 after its first quarter earnings came in below expectations.
At 9.07am, it was down 20 sen to RM2.33 with 1.90 million shares done.
The FBM KLCI rose 6.13 points to 1,547.07. Turnover was 31.24 million shares valued at RM31.13 million. There were 99 gainers, 72 losers and 99 stocks unchanged.
ECM Libra Research said KNM’s 1QFY11 net profit came in significantly below house and consensus expectations. Profit of RM19.4m made up less than 10% of full year estimates.
“The reason for the poor showing is that the group is still going through their older orders, which were low margin orders secured over FY10 (excluding the turnkey projects). Management had earlier guided on softer results in 1H11 hence this comes as no surprise.
“On a positive note, revenue growth indicates increasing utilisation which we gauge should be at roughly 70% from 60% in FY10,” it said.
http://www.theedgemalaysia.com/business/187238-knm-falls-on-weak-1q-earnings.html
Friday, 27 May 2011 15:52
KUALA LUMPUR: KNM GROUP BHD [] came under selling pressure in late afternoon on Friday, May 27, with the shares falling to a low of RM2.15, the lowest since Dec 13, 2010.
At 3.38pm, it was down 38 sen to RM2.15 with 73.09 million shares done.
The FBM KLCI rose 6.33 points to 1,547.27. Turnover was 635.06 million shares done valued at RM1.09 billion. The broader market displayed signs of weakening further, with 467 losers to 251 gainers and 299 stocks unchanged.
RHB Research Institute said KNM 1Q earnings were significantly below expectations due to legacy contracts.
“We have downgraded our call on the stock to Underperform based on 12x target PER (down from 15x) on revised FY12 EPS of 19 sen,” it said.
In the 1Q, its earnings fell to RM19.01 million from RM40.33 million a year ago.
OSK Research said KNM’s 1QFY11 results were below consensus and its expectations, making up 8% and 9% of the FY11 forecasts respectively.
“Overall, although there was improvement in its overall business activities, these remained slow, resulting in the company making a minimal PBT of only RM6.3 million, which was quite close to the RM6.9 million generated in 4QFY10. Also, its performance this quarter was boosted by the utilisation of tax incentives from Borsig’s acquisition amounting to RM12.8 million (4QFY10 of RM14.0 million),” it said.
Written by Joseph Chin of theedgemalaysia.com Friday, 27 May 2011 09:11
KUALA LUMPUR: Shares of KNM GROUP BHD [] fell in early trade on Friday, May 27 after its first quarter earnings came in below expectations.
At 9.07am, it was down 20 sen to RM2.33 with 1.90 million shares done.
The FBM KLCI rose 6.13 points to 1,547.07. Turnover was 31.24 million shares valued at RM31.13 million. There were 99 gainers, 72 losers and 99 stocks unchanged.
ECM Libra Research said KNM’s 1QFY11 net profit came in significantly below house and consensus expectations. Profit of RM19.4m made up less than 10% of full year estimates.
“The reason for the poor showing is that the group is still going through their older orders, which were low margin orders secured over FY10 (excluding the turnkey projects). Management had earlier guided on softer results in 1H11 hence this comes as no surprise.
“On a positive note, revenue growth indicates increasing utilisation which we gauge should be at roughly 70% from 60% in FY10,” it said.
http://www.theedgemalaysia.com/business/187238-knm-falls-on-weak-1q-earnings.html
Wednesday, March 9, 2011
KNM back to earnings guidance mode
PETALING JAYA: After a two-year hiatus, the management of KNM Group Bhd has started to give earnings guidance again.
According to AmResearch in a report yesterday, KNM’s management had met with analysts earlier in the week and guided earnings before interest, tax, depreciation and amortisation (Ebitda) of RM363 million for its FY11 (ending Dec 31, 2011), while the Ebitda for FY12 is targeted at RM564 million.
It added that the process equipment manufacturer for the oil and gas industry expects gross profit margins for FY11 and FY12 to be between 21% and 23%, which is higher compared with 19% in FY10.
Maybank Investment Bank (IB) research noted that KNM’s management expects to deliver a total revenue of RM2.4 billion in FY11 and RM3.4 billion in FY12, which is significantly higher compared with the total revenue in FY10, which stood at RM1.6 billion.
“KNM is confident of securing higher RM3 billion to RM3.5 billion new jobs per annum in 2011 to 2012 with higher quality (thus better margin) potentials. Order book backlog now stands at RM5.4 billion,” Maybank IB research noted in its report.
“Job momentum is rising with orders to come from key sectors; oil and gas, minerals, power, renewable energy and environment, and industrial services. Margins are set to improve, as KNM secures higher proportion of high-margin works,” it added.
The local research house has a “buy call” on the stock with an unchanged target price of RM4.35 per share, based on 14 times 2012 EPS.
Meanwhile, AmResearch in its report said KNM’s tenders worth RM17 billion could add another RM3 billion to the existing order book, assuming a success rate of 20%.
“We reiterate our “buy” call on KNM with an unchanged fair value of RM3.25 per share, pegged to an unchanged FY11F PE of 14 times — at parity to the stock’s one-year rolling forward PE average over the past three years,” it noted.
The research house has a “buy” call on the stock, with an unchanged fair value of RM3.25 per share.
While it seems like KNM is back in favour with the analysts, the same cannot be said of fund managers.
According to TA Investment Management’s chief investment officer Choo Swee Kee, the investing community is still staying on the sidelines when it comes to KNM due to the company’s unfavourable results in 4QFY10 where it saw its net profit plunging 64%.
“The 4QFY10 results have been below expectation, which come as a surprise to the investing community. Hence, we have to carefully evaluate the whole situation first before we increase our shareholding in the company,” he explained.
“We also need to see how the whole situation in the Middle East unfolds, as KNM has some exposure in the region. If things turn out bad, the market will be adversely affected,” he said, adding that the investing community is still waiting for more news on this matter.
Maybank IB research in its report yesterday said that while the crisis in the Middle East and North African oil exporting countries such as Libya and Tunisia is a concern, KNM has no operating presence in the affected countries.
It added that 24% of KNM’s order book comes from Saudi Arabia and the United Arab Emirates (UAE) while its manufacturing facilities are based in Jebel Ali in the UAE.
“KNM does not expect any job delay or suspension to its activities,” it noted.
Meanwhile, AmResearch in its report noted that talk of foreign acquisitions by KNM was purely speculative at this stage but management indicated interest in exploring nuclear energy projects, providing alternatives to fossil fuels.
KNM’s share price rose 12 sen yesterday to close at RM2.65.
According to AmResearch in a report yesterday, KNM’s management had met with analysts earlier in the week and guided earnings before interest, tax, depreciation and amortisation (Ebitda) of RM363 million for its FY11 (ending Dec 31, 2011), while the Ebitda for FY12 is targeted at RM564 million.
It added that the process equipment manufacturer for the oil and gas industry expects gross profit margins for FY11 and FY12 to be between 21% and 23%, which is higher compared with 19% in FY10.
Maybank Investment Bank (IB) research noted that KNM’s management expects to deliver a total revenue of RM2.4 billion in FY11 and RM3.4 billion in FY12, which is significantly higher compared with the total revenue in FY10, which stood at RM1.6 billion.
“KNM is confident of securing higher RM3 billion to RM3.5 billion new jobs per annum in 2011 to 2012 with higher quality (thus better margin) potentials. Order book backlog now stands at RM5.4 billion,” Maybank IB research noted in its report.
“Job momentum is rising with orders to come from key sectors; oil and gas, minerals, power, renewable energy and environment, and industrial services. Margins are set to improve, as KNM secures higher proportion of high-margin works,” it added.
The local research house has a “buy call” on the stock with an unchanged target price of RM4.35 per share, based on 14 times 2012 EPS.
Meanwhile, AmResearch in its report said KNM’s tenders worth RM17 billion could add another RM3 billion to the existing order book, assuming a success rate of 20%.
“We reiterate our “buy” call on KNM with an unchanged fair value of RM3.25 per share, pegged to an unchanged FY11F PE of 14 times — at parity to the stock’s one-year rolling forward PE average over the past three years,” it noted.
The research house has a “buy” call on the stock, with an unchanged fair value of RM3.25 per share.
While it seems like KNM is back in favour with the analysts, the same cannot be said of fund managers.
According to TA Investment Management’s chief investment officer Choo Swee Kee, the investing community is still staying on the sidelines when it comes to KNM due to the company’s unfavourable results in 4QFY10 where it saw its net profit plunging 64%.
“The 4QFY10 results have been below expectation, which come as a surprise to the investing community. Hence, we have to carefully evaluate the whole situation first before we increase our shareholding in the company,” he explained.
“We also need to see how the whole situation in the Middle East unfolds, as KNM has some exposure in the region. If things turn out bad, the market will be adversely affected,” he said, adding that the investing community is still waiting for more news on this matter.
Maybank IB research in its report yesterday said that while the crisis in the Middle East and North African oil exporting countries such as Libya and Tunisia is a concern, KNM has no operating presence in the affected countries.
It added that 24% of KNM’s order book comes from Saudi Arabia and the United Arab Emirates (UAE) while its manufacturing facilities are based in Jebel Ali in the UAE.
“KNM does not expect any job delay or suspension to its activities,” it noted.
Meanwhile, AmResearch in its report noted that talk of foreign acquisitions by KNM was purely speculative at this stage but management indicated interest in exploring nuclear energy projects, providing alternatives to fossil fuels.
KNM’s share price rose 12 sen yesterday to close at RM2.65.
Thursday, March 3, 2011
KNM Group said secured RM693m new orders in 2011
Written by Joseph Chin of theedgemalaysia.com Thursday, 03 March 2011 19:50
KUALA LUMPUR: KNM GROUP BHD [] said it has year-to-date secured new orders amounting to RM693 million, underpinned by the bullish sentiment in the global oil and gas industry globally as crude oil surges to record highs.
“The current order book of KNM stood at RM6.4 billion and the backlog at RM5.4 billion,” said the company, which described it as an all time for the group since it was set up,” it said on Thursday, March 3.
KNM said its tender book was RM17 billion, which it said had significantly improved compared with the trough of the sub-prime crisis which was at RM10 billion.
Executive chairman and CEO Lee Swee Eng said the group’s strong order book would keep it busy for 2011 and 2012.
Lee said the current strong order win reflected a rebound of order intake and its strong TECHNOLOGY [] product line, adding that he expected demand for process equipment to be strong as new projects come on stream in Malaysia and overseas.
KUALA LUMPUR: KNM GROUP BHD [] said it has year-to-date secured new orders amounting to RM693 million, underpinned by the bullish sentiment in the global oil and gas industry globally as crude oil surges to record highs.
“The current order book of KNM stood at RM6.4 billion and the backlog at RM5.4 billion,” said the company, which described it as an all time for the group since it was set up,” it said on Thursday, March 3.
KNM said its tender book was RM17 billion, which it said had significantly improved compared with the trough of the sub-prime crisis which was at RM10 billion.
Executive chairman and CEO Lee Swee Eng said the group’s strong order book would keep it busy for 2011 and 2012.
Lee said the current strong order win reflected a rebound of order intake and its strong TECHNOLOGY [] product line, adding that he expected demand for process equipment to be strong as new projects come on stream in Malaysia and overseas.
Monday, February 28, 2011
KNM wants to buy foreign firms, expand product line
By Sharen Kaur
Process equipment maker KNM Group Bhd (7164)aims to buy foreign firms and expand its product line in a bid to diversify and improve earnings, its chief said.
The group, which has RM300 million cash, is eyeing companies with investments in green technology, total solution and process, nuclear and environment, among others.
“There will be some major things happening within the next one year. The idea is to expand geographically and strengthen our product line,” KNM managing director Lee Swee Eng said.
Lee said the investment KNM made in 2008 to buy Borsig GmbH of Germany for e350 million (RM1.4 billion) has strengthened its belief that acquisitions are the right thing to do.
KNM’s German operations have been contributing 50 per cent to the group’s revenue and net profit.
Lee expects KNM to do better this year and growth to accelerate from 2012, driven by its order backlog of RM4.5 billion and business expansion.
KNM will start to see recognition from its RM680 million turnkey project in Uzbekistan and its RM2 billion biomass plant in the UK.
Last year, KNM posted a net profit of RM131.2 million on revenues of RM1.6 billion.
“Overall, we are profitable and on the road to recovery. Our existing order backlog is at an all time high compared to an average RM3.5 billion prior to the economic crisis.
“We are bidding for new projects worldwide,” Lee said at a luncheon in Kuala Lumpur yesterday.
Lee declined to comment on whether KNM will be taken private with its share price falling below fair market value.
Meanwhile, the luncheon, hosted by Germany Trade & Invest and Malaysian-German Chamber of Commerce and Industry, presented new opportunities for Malaysians to invests in all sectors in East Germany, backed by Europe’s largest airport project, Berlin Brandenburg International Airport (BBI).
BBI will have a capacity of 27 million passengers when it opens in early 2012.
Process equipment maker KNM Group Bhd (7164)aims to buy foreign firms and expand its product line in a bid to diversify and improve earnings, its chief said.
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“There will be some major things happening within the next one year. The idea is to expand geographically and strengthen our product line,” KNM managing director Lee Swee Eng said.
Lee said the investment KNM made in 2008 to buy Borsig GmbH of Germany for e350 million (RM1.4 billion) has strengthened its belief that acquisitions are the right thing to do.
KNM’s German operations have been contributing 50 per cent to the group’s revenue and net profit.
| |
KNM will start to see recognition from its RM680 million turnkey project in Uzbekistan and its RM2 billion biomass plant in the UK.
Last year, KNM posted a net profit of RM131.2 million on revenues of RM1.6 billion.
“Overall, we are profitable and on the road to recovery. Our existing order backlog is at an all time high compared to an average RM3.5 billion prior to the economic crisis.
“We are bidding for new projects worldwide,” Lee said at a luncheon in Kuala Lumpur yesterday.
Lee declined to comment on whether KNM will be taken private with its share price falling below fair market value.
Meanwhile, the luncheon, hosted by Germany Trade & Invest and Malaysian-German Chamber of Commerce and Industry, presented new opportunities for Malaysians to invests in all sectors in East Germany, backed by Europe’s largest airport project, Berlin Brandenburg International Airport (BBI).
BBI will have a capacity of 27 million passengers when it opens in early 2012.
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