Thursday, December 16, 2010

KNM up, OSK keeps Trading Buy, TP RM2.96

TP by OSK: RM2.96

Shares of KNM GROUP BHD rose in early trade on Wednesday, Dec 15 with OSK Research maintaining its trading buy on the stock with a higher target price of RM2.96 from RM2.22.

At 9.45am, KNM was up 14 sen to RM2.47 while its call warrants, KNM-CE rose 1.5 sen to 16 sen with 20.12 million units done.

The FBM KLCI rose 0.31 of a point to 1,510.89. Turnover was 213.36 million shares valued at RM233.46 million. Gainers led losers 201 to 142 while 217 stocks were unchanged.

OSK Research said sentiment in the O&G industry has improved tremendously over the last few weeks with the announcement of collaborations between Malaysia and its neighbouring countries on new oilfields, as well as the dishing out of new O&G contracts and a spate of positive news.

'We are maintaining our Trading Buy call on KNM with a higher target price of RM2.96 (previously RM2.22), based on a higher PER valuation of 12x (previously 9x) FY11 EPS,' it said.

OSK Research said KNM is one of the front-runners should there be a re-rating on the share prices of O&G stocks.

'Hence our target price higher as we believe there is still upside for investors to trade on the stock. In addition, KNM recently addressed concerns over its over-liquidity by implementing a 4-into-1 share consolidation. However, note that we are keeping our Trading Buy call until we see improved earnings potential for the company going forward,' it said.

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