Maybank Research raised its call on rubber manufacturer Kossan Rubber Industries Bhd to 'buy' from 'hold' on the back of declining latex costs and a stronger US dollar.
"Kossan's current latex:nitrile sales mix is 62:38 and it should benefit from the downtrend in key input costs," Maybank said in a note today.
"Additionally, earnings should also improve on a stronger US dollar as the bulk of its sales receipts are based in US dollar," Maybank added.
Maybank said Kossan's capacity expansion plans for its nitrile and surgical gloves would boost second half 2012 and 2013 earnings.
Raising the target price to RM3.75 (US$1.19) per share from RM3.50, Maybank kept its 2013-2014 earnings per share forecasts but trimmed 2012 forecasts by 4 per cent to factor in start-up costs from Kossan's glove factory in China. -- Reuters
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