KUALA LUMPUR (July 22): Kossan Rubber Industries Bhd rose as much as 23 sen or 3.4% after the Employees Provident Fund (EPF) increased its stake in the rubber glove manufacturer.

Kossan (fundamental: 2.1; valuation: 0.5) climbed to an intraday high of RM7.08 before reducing gains.

At 3.39pm, Kossan changed hands at RM7.01 with 408,900 shares changing hands. The stock was the third-largest gainer across Bursa Malaysia.

The share price gave the glove manufacturer a market capitalisation of RM4.48 billion. Kossan shares had risen 57% this year, outperforming the FBM KLCI's 2% fall.

The EPF had in recent days bought more Kossan shares on the open market. Kossan told Bursa Malaysia that the EPF had increased its Kossan stake to 6.71% comprising 42.94 million shares as at July 14.

This compared to 5.9% comprising 37.71 million shares as at June 23, according to Kossan's announcement to Bursa Malaysia on June 26.

TA Securities Holdings Bhd analyst Paul Yap told theedgemarkets.com that the research house was positive about Kossan and had a buy call with a target price of RM8.10 for the stock.

Yap said TA felt that Kossan shares “deserves to be traded at a premium.” At RM7.01, Kossan shares were transacted at a price-earnings ratio (PER) of 29.42 times, Bloomberg data showed.

This compared to the sector average PER of 24.21 times as export-based rubber glove manufacturers gained from a weaker ringgit against the US dollar and cheaper raw material.

“The lower rubber price generally benefits all the players in the market, but the company is benefiting from increasing demand as rubber glove has a defensive factor to it, given that it is used mainly in the healthcare sector,” he explained.

Natural rubber latex prices had fallen to RM4.43 a kg today from a one-year intraday high of RM5.12 in June this year.

Today, the ringgit was traded at 3.7922 versus the US dollar compared to its strongest level at 3.14 over the last one year.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)