KNM Group: Oil sands contracts cancelled - BUY

KNM Group: Oil sands contracts cancelled - BUY - Foong Choong
Chen

KNM Group (KNMG MK) - BUY
Price 0.42, TP 1.18, Mkt cap $456m, Avg t/o $8.3m

Oil sands contracts cancelled

* MYR80m oil sands contracts cancelled. Balance MYR140m under review. No
cancellations on non-oil sands jobs.

* Sentiment likely to be negative. Company may also reduce earnings
guidance at analyst briefing later this month.

* Maintain BUY. Longer term positive, as risk of slowdown
appears priced-in.

2008E: Rec EPS 0.11, P/E 3.8, P/B 0.8, ROE 32.7, Yld 4.8

2009E: Rec EPS 0.15, P/E 2.8, P/B 0.7, ROE 26.5, Yld 6.0

2010E: Rec EPS 0.18, P/E 2.4, P/B 0.6, ROE 25.5, Yld 8.3


Foong Choong Chen
BNP Paribas Capital (Malaysia) Sdn. Bhd.
(60 3) 2050 9938