KNM was awarded with a contract worth RM53.3m, adding to the feel good sentiment amid the crude oil rally (albeit the rally is taking a pause) following the drones attack over the weekend on Saudi Arabia’s production facilities. Meanwhile, Borsig listing on Singapore Exchange is still a market catalyst. Yesterday, KNM tried to breakout above the symmetrical triangle and the share price is holding above the upper band. Resistance is pegged at RM0.415-0.44, with a LT TP set at RM0.50. Support is anchored around RM0.36-0.37, while cut loss stood at RM0.355.

Awarded contract worth USD12.7m. KNM Group Bhd has bagged a contract worth USD12.74m (RM53.3m) in Thailand for the supply of big size CS/CLD columns and vessels up to 60MM for the Clean Fuel Project at the existing major oil refinery in Sriracha, Chonburi, on the east coast of Thailand as operated by Thai Oil Public Co Ltd. The order was received from PSS Netherlands B.V. Sharjah Branch and the supply and delivery duration of the contract is for a period not exceeding 12 months.

Borsig listing still a market catalyst. Since 2012, KNM has been toying with the idea of unlocking its wholly owned Germany-Borsig on Singapore Exchange. To recap, KNM has acquired Borsig for RM1.7bn in 2008. Hence, any valuations that are higher than the acquired price tag will be a healthy market catalyst to move KNM into higher territory.

Above upper band of symmetrical triangle. After the recent sideways consolidation phase between the RM0.36-0.385, share price has pushed above the upper band of the symmetrical triangle with improved volumes. The ADX indicator is turning positive (+DMI crossed above –DMI). Hence, we may anticipate further upside potential towards RM0.415-0.44, with a LT target set at RM0.50. Support is pegged around RM0.36-0.37, with a cut loss set around RM0.355.

Source: Hong Leong Investment Bank Research - 18 Sept 2019