By FARA AISYAH / Graphic By TMR

KNM Group Bhd continues to build its orderbooks with wholly owned subsidiary, KNM Process Systems Sdn Bhd, bagging two contracts from SK Engineering & Construction Co Ltd for the design, engineering and supply of Column-I(SK) and Column-II(SK) respectively for the RDMP RU-V Balikpapan project located at Balikpapan, Indonesia — operated by PT Pertamina (Persero) — for a total combined amount of US$13.29 million (RM55.62 million).

In an exchange filing yesterday, the energy-based services group noted that the supply and delivery duration of the transaction would be no later than March 24, 2021.

The contract is in addition to some RM110 million worth of contracts the company has clinched in the past three months alone.

The equipment manufacturer and engineering services provider for the energy and petrochemical industries are among the hottest penny stocks in the market. Its share price has jumped 413.33% year-to-date (YTD) to close at 39 sen yesterday.

KNM has gained RM790.93 million market capitalisation YTD and is now valued at RM998.13 million.

“We may anticipate further upside potential of the counter towards 41.5 to 44 sen, with a LT target set at 50 sen,” Hong Leong Investment Bank Bhd analyst Loui Low said in a recent note.

Technical chart wise, price support for the counter is pegged around 36 sen to 37 sen with a cut loss set around 35.5 sen, he added.

KNM’s share price rise was also helped by the net profit of RM18.44 million it made in the first quarter ended March 31, 2019 (1Q19), breaking five consecutive quarters of losses.

For 2Q19, KNM recorded a RM7.5 million net profit compared to a RM33.64 million net loss in the same quarter last year, due to improved gross profit margins and reductions in operating and administration expenses of the group.

KNM said the strategy to diversify its sources of income from project-based contracts to recurring-income businesses in renewable energy industry is still ongoing.

In September, KNM’s indirect wholly owned subsidiary, FBM-KNM Free Zone Co, had accepted a purchase order amounting to US$5.35 million for the supply of shell and tube heat exchangers-lot-1 for the clean fuel project at the existing major oil refinery in Sriracha, Thailand from PSS Netherlands BV, Sharjah Branch.

In the same month, KNM Process Systems had received a purchase order 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 amounting to US$12.74 million from the same company.

KNM Process Systems had also entered into a contract agreement with JO SK E & Co Ltd, Heavy Engineering Corp Ltd, PT Rekayasa Industri and Persero TBK in August, for the design, supply and delivery of shop assembled static equipment inclusive of large columns for the RDMP RU-V Balik-papan project located at East Kalimantan, Indonesia operated by Persero amounting to US$4.17 million.

Meanwhile in July, KNM Process Systems had accepted and signed-off on the purchase order worth US$4.25 million for the supply of shop-assembled large drums for the petrochemical complex in South of Vietnam — Package A1 — Olefins Plant from TPSK Consortium.