Friday 29 Mar 2024
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KUALA LUMPUR (Jan 26): Maybank IB Research has maintained its “Buy” rating on Kossan Rubber Industries Bhd at RM5.24 with an unchanged target price of RM5.90 on expectation of stronger 4Q14 net profit of RM36 million to RM38 million (+8% QoQ, flattish YoY).

The research house said it expected Kossan to register robust sales volume growth (+11% QoQ, +16% YoY), but potentially slight margin erosion.

In a note Monday, the research house said this would bring 12MFY14 net profit to RM144 million to RM146 million, in line with house forecast and consensus.

“We think its earnings growth in FY15-16 will be much stronger, underpinned by the full contributions of its latest three plants.

“We raise our FY15 EPS estimate by 6%, as the new capacities have started 2-3 months ahead of our expectation. However, our FY14 and FY16 earnings forecasts remain unchanged,” it said.

Maybank IB said it continues to like Kossan for its: (i) solid earnings growth (FY15E: +29%), (ii) rising production efficiency (latest plants run at 45,000pcs/hour, similar to industry leader Hartalega) and (iii) product innovations (light weight nitrile gloves) which have led to improved margins and higher ROE (similar to Hartalega now).

Kossan jumped 4.58% or 24 sen to RM5.48 with 347,800 shares done in the morning session Monday.

 

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