Saturday, October 24, 2009

KNM - BUY





In the latest Maybank Equity Research dated 23 Oct 2009 has upgraded KNM group from SELL to BUY from previous target price RM0.69 to RM1.02.

Reasons are: (source from Maybank Equity Research)
1. Replenishment risk abating.
KNM's oustanding order book has stabilised at RM2.7b as at Sep 09. Also new job flows have started to pick up.

2. Job enquiries also on the rise.
To-date, 50% of KNM’s RM14b in tenders have been activated versus 10-15% 6 months ago.With job enquiries growing, we expect higher contract flows in 2010. New order wins will come from Malaysia and overseas (i.e. Middle East, Australia, PNG). We think KNM stands a strong chance of winning another RM400-500m contract from Verwater alone for Phase 2 of the storage terminal and marine facilities project in Yan, Kedah.
3. Exiting Chad to be positive.
Elsewhere, KNM’s intended venture into Chad is likely to be off unless it secures bank financing for the Sedigi project. The market would react positively should KNM drop its interest in Chad as a turnkey contractor or just surface as a sub-contractor for this project considering the security, execution and financial risks involved.
4. Expect earlier recovery, by 2010.
Forecast for 2010-11 will raise by 16% and 28% respectively as we expect full order book revival by 2H10. This suggests earnings growth revival from 2010, ahead of our initial expectations.


Tips:
Top 10 high volume stock with high fluctuation and speculation. This counter will be able give you an excitement everyday like riding a roller coaster. The current KNM's price is RM0.85 and if the TP is being realized then its going to be 23% profit. The lowest it can be speculated maybe at RM0.70, a very strong support level. So again....which way are you speculating? I voted up! I bought it in when it down to the support level and even now I still believe KNM still strong fundamentally with its businesses and growth.

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