KH Group's Q1 report was weak as expected, but the figures were still below our updated forecasts after the profit warning. In terms of the Group's balance sheet position, the partial exercise of the put options on the minority interest in KH-Koneet came at a challenging time and at a high price, which eroded the loss buffer of the parent company. On our sum-of-the-parts basis, the stock still has significant upside potential, but the balance sheet risk of weak earnings and a leveraged balance sheet weigh on the stock's risk/reward.

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