KUALA LUMPUR (Aug 28): KNM Group Bhd rose as much as 3% before reducing gains after the process equipment manufacturer reported a 50% rise in second quarter net profit from a year earlier.

At 4.13pm, KNM was traded at RM1.01 with some 9.2 million shares done. The stock had earlier risen as much as three sen to RM1.03.

Hong Leong Investment Bank Bhd wrote in a note today the research firm had maintained its "buy" call for KNM shares. The recommendation came with a target price of RM1.35 for the stock.

Yesterday, KNM said net profit rose to RM11.12 million in the second quarter ended June 30, 2014 from RM7.39 million a year earlier. First half (1HFY14) net profit rose to RM25.29 million from RM9.62 million.

Today, Hong Leong noted that KNM's 1HFY14 core earnings rose three times at RM30 million, making up 45% of the research firm's and the consensus forecast. Hong Leong said the figure was in line with estimates.

Hong Leong said KNM's 1HFY14 year-on-year revenue growth was due to the positive environment in Europe and the Americas. This had offset the weak environment in Asia.

"The EnergyPark Peterborough project is progressing well with financial closure expected to be in end of 3Q14. It expects the construction of EnergyPark to start in 4Q14 and commence contribution in FY17.

"We estimate Phase 1 (18MW or 23% of total 80 MW) to add RM0.39 NAV per share to our target price," Hong Leong said.