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Tuesday, June 14, 2011

ECM Libra Research downgrades KNM to Hold, cuts TP to RM1.68 (Edge)

ECM Libra Research has downgraded KNM GROUP BHD [] to a Hold from Buy previously and cut its target price for the stock from RM3.43 to RM1.68 after KNM lowered its FY11 profit guidance by some 26% on June 13 to RM270 million at EBITDA levels owing to project delays and also lower than expected margins.

The research house in a note Tuesday, June 14 said it was downgrading its earnings estimates for KNM by 48-54% for FY11-FY13 to be slightly lower than the group’s already lowered guidance.

KNM’s margins were now moving targets as project delays resulted in higher manufacturing costs, it said.

“We are cutting our FY11 earnings estimate by 51% to account for delays in the UK biomass project as well as overall lower margins for existing orderbook.

“We also cutting FY12 and FY13 earnings on the assumption that current orderbook will not be as lucrative as expected,” it said.

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