KNM Group (KNMG) announced on Bursa Malaysia yesterday that it has secured  new  orders worth MYR307m  from  an  existing contract.  We  are still  NEUTRAL  on  the stock  but  raise  our  FV  to MYR0.63  from MYR0.47 previously,  as  we  roll  over  our  valuations  to  10x  the stock’s 12-month forward earnings (vs 10x FY13 EPS previously).

-  Order  book  (excluding  Peterborough)  surges  to  MYR2.4bn.  On  18 Feb, KNMG secured a MYR308.6m contract from Public Stock Company TAIF-NK, for a project based in Russia. The additional MYR307m in new orders  will  double  the  total  orders  secured  from  this  project  to  about MYR615.6m. This will boost KNMG’s orderbook to MYR2.4bn, excluding its renewable energy plant in Peterborough, UK.

- Tweaking  our  numbers.  Following  a  recent  reallocation  of  resources, we are making some minor tweaks to our earnings projections. We raise our  FY13  earnings  estimate  by  14.9%  but  trim  our  FY14  earnings estimate  by  5.6%.  We  still  have  concerns  that  delays  in the company’s projects could result in weaker than expected earnings growth in the near term.

- Maintain  NEUTRAL.  We  are  revising  upwards  our  FV  to  MYR0.63 (previously  MYR0.47)  as  we  roll  over  our  valuations  to  10x  12-month forward earnings (vs 10x FY13 EPS previously). Given the slim potential upside  of  6.8%  from  the  current  share  price,  we  retain  our  NEUTRAL recommendation on the stock.

Source: RHB