tag:blogger.com,1999:blog-27504100411130097882023-06-20T05:21:25.657-07:00FBM KLCIFBM KLCI | Malaysia Share Market | Make Money With Share Market | Bursa Malaysia | KLSE | Warrant | Share Market | Make Profit In Share MarketUnknownnoreply@blogger.comBlogger1125tag:blogger.com,1999:blog-2750410041113009788.post-32149148918367842802010-07-13T01:55:00.000-07:002010-07-13T01:58:37.771-07:00KNM Group - Signs of better times?<span style="font-weight: bold; color: rgb(255, 0, 0);">New orders picking up</span><br /><ul><li>Order book at year-high of RM2.4b; eyeing several sizable contracts in SEA and Europe</li><li>To take advantage of tax incentives by bringing more production home</li><li>Maintain Hold; re-rating hinges on contract flows in 2H10</li></ul><br /><span style="font-weight: bold;">Signs of better times?</span> KNM has secured RM1.0b worth of jobs thus far, double what it secured in 1H09. Its current order book is at the year-high of RM2.4b compared to RM1.8b in the beginning of the year. Its average selling price (ASP) has also improved moderately to close to RM20,000/MT from a low of RM18,500 in 2009 (record high of RM22,500 in 2008). We understand KNM is eyeing several sizable contracts (>RM100m) in South East Asia and Europe. We expect accelerating oil & gas activities for the rest of this year to drive future demand for process equipment.<br /><br /><span style="font-weight: bold;">Extending market reach</span>, benefit from tax incentive. KNM may add two more plants to extend its global market presence. But the investments would be small at c.RM40m with a potential JV local partner. KNM expanded its Saudi Arabia capacity recently, bringing total group capacity to 157,300MT/year (+6.8%). Meanwhile, works are currently underway to upgrade its Kuantan plant to undertake manufacturing of BORSIG’s boilers for the global market. There is also a plan to package BORSIG’s membrane equipments in Malaysia to take advantage of the RM1.4b tax incentive and improve overall cost efficiency.<br /><br /><span style="font-weight: bold;">Maintain Hold and RM0.55 TP</span>. We are maintaining our earnings assumptions at this juncture, as utilisation rate remains low at 60% and margins are still expected to be sluggish in 2Q10. Re-rating catalyst for the stock would depend on job orders in 2H10. We reiterate our Hold rating for KNM with a target price of RM0.55, pegged to 9.0x FY11F PE. The counter is currently trading at 8.4x FY11F PE against the sector’s 8.8x and the region’s 15.0x.Unknownnoreply@blogger.com0