KNM falls 4% on downgrade amid lower oil prices



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KUALA LUMPUR (Nov 27): KNM Group Bhd fell as much as 4% after analysts downgraded their target price (TP) for shares in the process equipment manufacturer amid lower oil prices. The downgrade was despite KNM reporting stronger third quarter financials.

At 9.14am, KNM was traded at 57.5 sen with some 12 milion shares done. KNM, which became the bourse's most-active stock, had earlier fallen as much as 2.5 sen to RM56.5 sen.

For comparison, the FBM KLCI rose 1.03 points or 0.1% while oil and gas (O&G) companies like SapuraKencana Petroleum Bhd fell eight sen or 2.5% to RM3.15.

Yesterday, KNM reported that net profit rose 160% to RM16.44 million in the third quarter ended September 30, 2014 from RM6.32 million a year earlier.

Cumulative nine-month (9MFY14) net profit was higher at RM41.73 million from a year earlier.

Today, Hong Leong Investment Bank Bhd wrote in a note that KNM's 9MFY14
core profit of RM52 million was in line with forecast. The figure constituted 79% and 78% of Hong Leong's and consensus forecast respectively.

Hong Leong, however, lowered its TP for KNM shares to 98 sen from RM1.35 previously.

According to Hong Leong, the lower TP for KNM is "in line with our target P/E de-rating for O&G companies due to weak sentiment amid declining oil price.