THINGS are looking increasingly upbeat for oil and gas services provider KNM Group Bhd, as the company continues to pick up more contract wins that will boost its earnings going forward.
Over the week, for instance, KNM announced it would be forming an alliance with state-owned Petrosab Logistik Sdn Bhd to set up a 51:49 joint-venture company in Sabah. Analysts are positive with the recent development, as it will boost KNM's success rate for any potential contracts in the state, where most of the deep-water projects take place.
More contracts are expected to flow out of Sabah next year following the formalisation of the Sabah Oil & Gas Terminal
(SOGT) construction. It is understood that KNM is bidding for the process equipment supply deal under the SOGT project. The company is also eyeing for other projects in Kimanis and Sipatang areas in the state.
KNM's current orderbook stands at RM2.4bil, and tender book at RM16bil.
Analysts believe there is much potential upside for the company's share price, given its improved earnings prospects. In addition, the oil and gas sector as a whole is due for an upward re-rating on the back of strong crude oil prices and projects rollout.
KNM closed at RM2.66 yesterday. Analysts believe it's time to accumulate the company's share price, which some see the potential of exceeding RM3 over the medium term. - by The Star Online
The comments above do not represent a recommendation to buy or sell.
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