Stock Name: KNM
Company Name: KNM GROUP BHD
Research House: TA



TA has slashed its earnings forecasts for KNM Group for financial year 2010 and 2011 by 51.9 per cent and 37.9 per cent respectively.

TA said it was assuming a weaker performance in Asia & Oceania, mainly Malaysia, and slower pickup in orders and pricing power.

"We also have cut utilization rate assumption for FY11 to 65 per cent from 72 per cent, after taking into consideration the above factors and capacity addition from the Saudi Arabian plant," said TA.

"We downgrade the stock to a 'Sell' from 'Buy' due to risk of continuous earnings disappointments in the absence of big contracts," TA added.

The stock is valued at RM0.44 based on a 10 per cent discount to calendar year 2011 target sector PER of 11x.