KNM’s 1HFY11 results were below expectations despite the higher revenue recognition from its projects in 2QFY11. This was due to the recognition of lower margin product mix as well as lower capacity utilization in certain operating units. Hence, we are downgrading our FY11-12 earnings by 11%-34%. Maintain Trading Buy, with lower fair value of RM2.20 based on existing PER of 13x FY12 EPS.
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