KUALA LUMPUR (Feb 29): RHB Research Institute is maintaining its Underperform on KNM GROUP BHD [] at 94 sen and accorded a fair value of 68 sen.
It said on Wednesday there could be more downside risks for earnings in the near term.
“As such, we continue to be cautious on the stock. Rerating catalysts will be when it starts to show sustainable earnings and operational improvement. We maintain our fair value estimate of 68 sen a share based on unchanged 0.4 times FY12 price-to-book value,” RHB Research said.
The research house said KNM Group’s FY2011’s loss before tax of RM147.5 million was better than its expectations of RM187.7 million, but worse than consensus full-year loss before tax estimate of RM93.6 million.
“The variance to our estimate was largely due to lower-than-expected interest costs. We have opted to look at the profit before tax of the company as it is a better measure of KNM’s operational earnings and excludes the effect of the tax incentive,” RHB Research said.
It said on Wednesday there could be more downside risks for earnings in the near term.
“As such, we continue to be cautious on the stock. Rerating catalysts will be when it starts to show sustainable earnings and operational improvement. We maintain our fair value estimate of 68 sen a share based on unchanged 0.4 times FY12 price-to-book value,” RHB Research said.
The research house said KNM Group’s FY2011’s loss before tax of RM147.5 million was better than its expectations of RM187.7 million, but worse than consensus full-year loss before tax estimate of RM93.6 million.
“The variance to our estimate was largely due to lower-than-expected interest costs. We have opted to look at the profit before tax of the company as it is a better measure of KNM’s operational earnings and excludes the effect of the tax incentive,” RHB Research said.
