KUALA LUMPUR (Oct 20): KNM Group Bhd ( Financial Dashboard) rose 1.3% after the process equipment manufacturer proposed a one-for-five rights issue with free warrants.

At 10.32am, KNM was up one sen at 75.5 sen with some 11.8 million shares done. The counter had earlier risen as much as 2 sen or 2.68% to 76.5 sen.

For comparison, the FBM KLCI rose 14.09 points or 0.8%.

Last Friday, KNM proposed a one-for-five renounceable rights issue of up to 430.49 million new shares. The exercise comes with free warrants on the basis of one warrant for every two rights shares subscribed

“Assuming an indicative issue price of 72 sen per rights share, the proposed rights issue is expected to raise gross proceeds of up to RM232.61 million and RM309.95 million under the minimum scenario and maximum scenario, respectively,” said KNM.

Today, Maybank Investment Bank Bhd (Maybank IB) wrote in a note it reiterated its “buy” call on KNM shares with an unchanged target price of RM1.50.

Maybank IB recommended KNM shareholders to subscribe to the rights shares.

“KNM, in our view, plans to use the majority of the proceeds for its (Petronas) RAPID and Peterborough waste-to-energy (WTE) projects. As these two projects will anchor KNM’s prospects over the next few years, we advocate shareholders to subscribe to the rights issue,” said Maybank IB.

Maybank IB further said that KNM’s fundamentals were intact, with more incoming projects besides the US$300 million (RM982.2 million) worth of contracts from RAPID.