KUALA LUMPUR (Nov 19): Shares in KNM Group Bhd slumped in morning trade on Bursa Malaysia on Friday (Nov 19) after the oil and gas equipment services group said it had missed principal and coupon payments on Thai bonds worth RM352.57 million as it encountered challenges due to the Covid-19 pandemic, besides unfavourable conditions of its subsidiary Impress Ethanol Co Ltd (IECL) in Thailand.
The counter opened at 16 sen, down as much as 11.11% or two sen from its previous close.
At the time of writing, KNM — most active stock on Bursa so far — had pared its loss, still down one sen or 5.56% at 17 sen.
At 17 sen, the stock had a market capitalisation of RM568.34 million.
The counter had plunged by 50% from its peak of 32 sen on Sept 7. Year to date, it had fallen 22.73%.
Some 44.37 million shares were transacted so far in the day, lower than its 200-day average volume of 68.09 million.
KNM said the non-payment event may have an adverse impact on the group’s financing facilities as well as its subsidiaries in the event that the respective financial institutions suspend their financing facilities granted to KNM pending the resolution of the non-payment event.
The group also noted that it is in an advanced stage of discussions with several financial institutions to secure new financing for the repayment of the bonds, but it said final approval decisions on the new financing facilities are not expected to be made until after the maturity date of the bonds.
The bonds matured on Wednesday. The company has a grace period until Dec 2 to pay the principal sum, and until Dec 9 to pay the coupon before the event of a default occurs.
For the second quarter ended June 30, 2021 (2QFY21), KNM’s net profit declined by 5.91% to RM10.56 million versus RM11.22 million for the same quarter last year as quarterly revenue fell 26.14% to RM245.98 million from RM333.03 million for 2QFY20.
The group cited that the lower net profit and revenue were largely due to slow replenishment of orders caused by the Covid-19 pandemic worldwide.
For the cumulative six months ended June 30, 2021, net profit dropped 72.84% to RM8.55 million from RM31.48 million a year earlier. Cumulative six-month revenue, on the other hand, decreased by 28.73% year-on-year to RM477.21 million from RM669.59 million.
On its prospects, KNM anticipates that the outlook for FY21 remains challenging due to continuous uncertainties in the global economic outlook arising from the impact of the Covid-19 pandemic.
“The underlying industries that drive our business prospects, such as oil and gas, petrochemical and energy, will remain challenging as a recovery from the disruption of the Covid-19 pandemic largely depends on the roll-out speed of vaccination to the majority of the populations, stability of crude oil prices and the resurgence of the Covid-19 pandemic, particularly in Asia.
“The board will take the necessary measures to manage and mitigate these uncertainties. We believe that with the various efforts undertaken by the various governments, the global economy will show an improvement towards the end of 2021 with higher vaccination rates and easing of lockdowns, particularly in major economies including the US, Europe and China,” it added.