Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: MIDF | Price Call: HOLD | Target Price: 6.77 |
Showing posts with label KOSSAN. Show all posts
Showing posts with label KOSSAN. Show all posts
May 22, 2015
Enjoying a surge in volume
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: MIDF | Price Call: HOLD | Target Price: 6.77 |
December 15, 2014
Securing the Future
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: TA | Price Call: BUY | Target Price: 5.40 |
May 26, 2014
KOSSAN - Maintaining its Momentum
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: TA | Price Call: BUY | Target Price: 5.25 |
Kossan - Positive expansion plans in 2014
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: MIDF | Price Call: BUY | Target Price: 5.23 |
June 17, 2013
Alliance reiterates 'overweight' on glove
Stock Name: HARTA
Company Name: HARTALEGA HOLDINGS BHD
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Alliance Research has reiterated its overweight call on the glove sector, with top picks being Hartalega and Kossan.
The research house said it remains positive on the sector in anticipation of soft and stable latex prices, the strong US dollar against the ringgit, and improving supply and demand dynamics.
It said the glove sector delivered mixed results in 1QCY13: among four stocks under coverage, one beat estimates, two disappointed while another met expectations.
"Overall, demand growth was strong (+17.7 per cent y-o-y) during the quarter, which we attribute to the global influenza trend since November 2012.
"On the flip side, the natural rubber glove segment performed weaker than expected as the nitrile glove migration wave continued to gain strength due to the widening cost advantage.
"This led to Top Glove and Supermax missing consensus estimates," said Alliance Research, which has put a target price of RM6.80 for Hartalega and RM4.85 for Kossan.-- Bernama
Company Name: HARTALEGA HOLDINGS BHD
| Research House: ALLIANCE | Price Call: BUY | Target Price: 6.80 |
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: ALLIANCE | Price Call: BUY | Target Price: 4.85 |
Alliance Research has reiterated its overweight call on the glove sector, with top picks being Hartalega and Kossan.
The research house said it remains positive on the sector in anticipation of soft and stable latex prices, the strong US dollar against the ringgit, and improving supply and demand dynamics.
It said the glove sector delivered mixed results in 1QCY13: among four stocks under coverage, one beat estimates, two disappointed while another met expectations.
"Overall, demand growth was strong (+17.7 per cent y-o-y) during the quarter, which we attribute to the global influenza trend since November 2012.
"On the flip side, the natural rubber glove segment performed weaker than expected as the nitrile glove migration wave continued to gain strength due to the widening cost advantage.
"This led to Top Glove and Supermax missing consensus estimates," said Alliance Research, which has put a target price of RM6.80 for Hartalega and RM4.85 for Kossan.-- Bernama
November 9, 2012
Higher dividend in the horizon
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: MIDF | Price Call: BUY | Target Price: 3.71 |
August 24, 2012
Kossan - 2QFY12 Results Review
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: MIDF | Price Call: BUY | Target Price: 3.71 |
March 28, 2012
Rubber Glove - Neutral - 28 March 2012
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Stock Name: HARTA
Company Name: HARTALEGA HOLDINGS BHD
Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Stock Name: ADVENTA
Company Name: ADVENTA BHD
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: KENANGA | Price Call: BUY | Target Price: 3.64 |
Stock Name: HARTA
Company Name: HARTALEGA HOLDINGS BHD
| Research House: KENANGA | Price Call: HOLD | Target Price: 8.32 |
Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
| Research House: KENANGA | Price Call: HOLD | Target Price: 4.36 |
Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
| Research House: KENANGA | Price Call: HOLD | Target Price: 2.06 |
Stock Name: ADVENTA
Company Name: ADVENTA BHD
| Research House: KENANGA | Price Call: SELL | Target Price: 1.41 |
We are currently NEUTRAL on the sector due to the high latexprice, which is eroding the sector margins. While we are cautious on the latexprice trend, the glove players on the other hand believes that latex priceswill ease back later due to the ample supply of natural rubber. Hence, we mayupgrade the sector later if the price situation improves significantly in theshort term. For now, we are maintaining a Neutral rating on the sector in viewof the current high latex price, which is being supported by the Thaigovernment and a strengthening of RM. For the sector, we have an Outperformcall on Kossan Rubber (TP: RM3.64) and are maintaining our Market Perform callson Hartalega (Market Perform; TP: RM8.32), Top Glove Corporation (Market Perform; TP: RM4.36) and Supermax Corporation(Market Perform; TP: RM2.06). We retainan Underperform call on Adventa (Under Perform; TP: RM1.41)
4Q11 results update. The rubber glove companies' 4Q11 results weremostly in line with expectations with the exception of Topglove, which exceededexpectations and Adventa, which saw its results coming in below expectations.The companies generally recorded flattish quarterly earnings with flat marginsand a small growth in sales QoQ. Topglove however reported a very strong growthduring the quarter (+70% QoQ) with higher margins from 5.7% to 9.7% as itbenefits the most from the positive spread due to the lower latex price.
Stabilizing latexprice? Since the government of Thailand set a minimum price for latex, theprice of latex has surged by more than 11% in the past few months fromRM7.00/kg to a high of RM7.80/kg currently. Although the latex price hasincreased, the glove players still expect natural latex price to ease backlater and stabilise in the long term as they opined that there is no shortage of naturalrubber latex supply and believe that there is an ample supply of natural rubberdue to the additional plantations in neighboring countries like Cambodia andSouth Vietnam. Furthermore, these players expect latex traders to release theirstocks later to unlock their cash flow, and this would suppress the latexprices.
Currency impact.The USD has depreciated c.4% to less than RM3.03/USD from an average ofRM3.15/USD three months ago. Thestrengthening of Ringgit would have negative impacts to glove makers' bottomlines given that most of their sales are denominated in USD. That said,Thailand, the industry's nearest competitor, is facing even bigger problemsgiven the greater volatility in the Thai Baht compared to Ringgit (by c. 6% in thesame period). Meanwhile, Malaysia has not been losing any competitive advantageto Indonesia as the latter does not have the same production scale and technologydespite its weaker currency exchange against the USD.
Reducing cost viathinner latex gloves. We understandthat the glove players are moving to super thin gloves (3.5g), which is similaror in line with nitrile powder free glove. This will reduce the consumption ofnatural rubber latex, which accounts for about 50%-60% of the production cost.Meanwhile, demand growth for gloves remains healthy, allowing glove makers tocontinue being price makers and passing on any cost increases to customers.
Maintain Neutral.We maintain a Neutral rating on the sector given the current higher latex pricecaused possibly by the artificial support of rubber prices by the Thai,Indonesian and Malaysian governments and the continuing strengthening of RM againstthe USD. We like Kossan Rubber (Outperform; TP: RM3.64) for its well balanced mix in nitrile andlatex gloves and are maintaining our Market Perform calls on Hartalega (MarketPerform; TP: RM8.32), Top GloveCorporation (Market Perform; TP: RM4.36) and Supermax Corporation (MarketPerform; TP: RM2.06). We retain anUnderperform call on Adventa (Under Perform; TP: RM1.41).
Source: Kenanga
February 27, 2012
KOSSAN - Stable margins
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Kossan Rubber Industries; Hold; RM3.28
Price Target: RM3.30; KRI MK
4Q11/FY11 results were within our expectations, but slightly below consensus expectations. Adding 1.25bn pieces capacity by 2H2012, and raising nitrile gloves mix to 48% from 40%. Maintain Hold and RM3.30 TP.
Source: HwangDBS Research 27 Feb 2012
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 3.30 |
Kossan Rubber Industries; Hold; RM3.28
Price Target: RM3.30; KRI MK
4Q11/FY11 results were within our expectations, but slightly below consensus expectations. Adding 1.25bn pieces capacity by 2H2012, and raising nitrile gloves mix to 48% from 40%. Maintain Hold and RM3.30 TP.
Source: HwangDBS Research 27 Feb 2012
Kossan Rubber Industries - Earnings boost from Technical Rubber Products BUY
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: AMMB | Price Call: BUY | Target Price: 4.31 |
' Kossan Rubber Industries (Kossan) reported a flattish net profitof RM24mil for 4Q, bringing full-year earnings to RM91mil. The results met ourexpectations coming in on the dot, but accounted for only 95% of consensus.
' Kossan chalked up a higher turnover for FY11, up 4% YoY onthe back of:- 1) Higher sales from improved demand for its Technical RubberProducts (TRP) due to increased infrastructure projects (YoY: 20%) and; 2)Several upward revisions to ASPs from core rubber gloves division (YoY: 3%).
' Despite this, the bottomline declined 19% over the same period,as benefits of higher ASPs were more than offset by EBITDA margin that fell2.4ppts to 15% due to higher latex costs. As an indication, latex price roseby an average of 20% for FY11 comparedto the preceding year.
' NR latex, which makes up the bulk of Kossan's total operatingcosts at 56%, will continue to track rubber price volatilities in themarket.
' Even though SMR20 grade bulk latex prices are on an upwardtrend since January 2012, we are not too concerned as the seasonal rubber trees'wintering season' typically sees less yield, thus lending support to higher rubberprices. We believe rubber prices would ease over the long term on the back ofexcess supply and weakening rubber demand from global automobile industry.
' Additionally, Kossan's strategic move into higher valued non-NRgloves, namely cleanroom variants, would serve to mitigate the group's earningsrisks over the long run. It aims to boost manufacturing of non-NR gloves from40% of its product mix to 50% by end-FY12F.
' The group's expansion plans are on track, with additional capacitiesto drive earnings growth moving forward. Total installed capacity is set torise by 2.5 billion pieces by July FY12F, and a further 2 billion pieces bynext year. All in, the additional lines will bring the group's installedcapacity to a total of 17 billion pieces per annum by end-FY13F.
' We maintain our BUYrating on Kossan with an unchanged fairvalue of RM4.31/share, based ona fair PE of 12.5x FY12F earnings. We continue to like the group for its less susceptibleearnings portfolio as underpinned by its more balanced product mix. Ourvaluation is a tad above the stock's10-year mean of 11x, but still at a 35% discount to industry leader Top GloveCorp's (TOPG Mk Equity, Buy) fair PE of 19x.
Source: AmeSecurities
Kossan Rubber Industries: Downgrade to Hold - In need of fresh catalysts
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Downgrade to Hold. 4Q11 net profit of RM24m (+1% QoQ, -19% YoY) brought full-year 2011 net profit to RM91m (-23% YoY), within our and the market's expectations. Kossan's share price has risen by 27% in six months and is only 7% away from our TP of RM3.50 (9.5x 2013 PER). We think the stock lacks re-rating catalysts for now, with latex cost on a seasonal upward trajectory again. We downgrade the stock to Hold.
Maybank Research 27 Feb 2012
Click here for full report
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 3.50 |
Downgrade to Hold. 4Q11 net profit of RM24m (+1% QoQ, -19% YoY) brought full-year 2011 net profit to RM91m (-23% YoY), within our and the market's expectations. Kossan's share price has risen by 27% in six months and is only 7% away from our TP of RM3.50 (9.5x 2013 PER). We think the stock lacks re-rating catalysts for now, with latex cost on a seasonal upward trajectory again. We downgrade the stock to Hold.
Maybank Research 27 Feb 2012
Click here for full report
Kossan Rubber Industries - Relief is at hand after FY11 blip
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Target RM3.66
FY11 was uncharacteristic due to the abnormal rise in rubber price. EPS growth will regain traction in FY12 when Kossan ramps up China sales where consumption is just 5% of developed standards. It will also launch a surgical product in Sep 2012, underpinning FY13 cash flow.
Source: CIMB Daybreak February 27, 2012, FULL PDF Report
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: CIMB | Price Call: BUY | Target Price: 3.66 |
Target RM3.66
FY11 was uncharacteristic due to the abnormal rise in rubber price. EPS growth will regain traction in FY12 when Kossan ramps up China sales where consumption is just 5% of developed standards. It will also launch a surgical product in Sep 2012, underpinning FY13 cash flow.
Source: CIMB Daybreak February 27, 2012, FULL PDF Report
Kossan Rubber Industries (4QFY11 Results): In line
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Maintain BUY, TP: RM4.02
4QFY11 net profit came in at RM23.8m (0.9% q-o-q; -18.6% y-o-y). This brings full year FY11 net profit to RM91m (-19.4% y-o-y) which was within our and consensus expectations. We like Kossan because of: (i) its undemanding valuations. Kossan is trading at 9.5x FY12 EPS compared to Top Glove's 22x. (ii) The company is moving up the value chain by offering higher margin surgical and clean room gloves; and
(iii) product mix contains less natural rubber glove which is sensitive to movements in latex price. Maintain BUY with RM4.02 target price based on 11x FY12 EPS, in line with its historical average. (refer to report for details)
Source: ECM Newz Bits February 27, 2012, FULL PDF Report
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: ECMLIBRA | Price Call: BUY | Target Price: 4.02 |
Maintain BUY, TP: RM4.02
4QFY11 net profit came in at RM23.8m (0.9% q-o-q; -18.6% y-o-y). This brings full year FY11 net profit to RM91m (-19.4% y-o-y) which was within our and consensus expectations. We like Kossan because of: (i) its undemanding valuations. Kossan is trading at 9.5x FY12 EPS compared to Top Glove's 22x. (ii) The company is moving up the value chain by offering higher margin surgical and clean room gloves; and
(iii) product mix contains less natural rubber glove which is sensitive to movements in latex price. Maintain BUY with RM4.02 target price based on 11x FY12 EPS, in line with its historical average. (refer to report for details)
Source: ECM Newz Bits February 27, 2012, FULL PDF Report
February 17, 2012
Rubber Value Chain - Time to restock
Stock Name: HARTA
Company Name: HARTALEGA HOLDINGS BHD
Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
2H12 restocking will benefit processors and logistics players alike. Our top BUY is Goodpack. Margin recovery for glove-makers is already priced-in; accumulate Top Glove on weakness. Lower natural rubber price forecasts will have limited impact earnings. Stick with volume plays. Risks: European debt crisis, volatile crude oil prices, government intervention.
Hartalega Holdings; Hold; RM7.92Price Target: RM7.70; HART MK
Taking a breather
TP raised to RM7.70 pegged to 13x CY12 EPS led by better growth visibility. Lower latex prices to have marginal impact on EPS as latex glove segment is small (10%); expect flat 3Q12, margins still under pressure. Downgrade to Hold on limited share price upside.
Top Glove Corporation; Hold; RM5.00
Price Target: RM4.80; TOPG MKValuation setback
Cut latex price assumptions by 8% and raised FY12-14F EPS by 2-3%. FY12 will be a recovery year with lower latex costs and better sales mix. Raised TP to RM4.80 pegged to 15.5x CY12 EPS; expectations of margin recovery and stronger earnings have been priced in; Maintain Hold.
Kossan Rubber Industries; Hold; RM3.44
Price Target: RM3.30; KRI MKPositives priced in
Cut latex price assumptions by 8% and raised FY13/14 EPS by 2-3%; FY11 earnings intact. Expect flat earnings in 4Q1. Raised TP to RM3.30 pegged to 9x CY12 EPS; Maintain Hold as positives have been priced in.
Source: HwangDBS Research 17 Feb 2012
Company Name: HARTALEGA HOLDINGS BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 7.70 |
Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 4.80 |
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 3.30 |
2H12 restocking will benefit processors and logistics players alike. Our top BUY is Goodpack. Margin recovery for glove-makers is already priced-in; accumulate Top Glove on weakness. Lower natural rubber price forecasts will have limited impact earnings. Stick with volume plays. Risks: European debt crisis, volatile crude oil prices, government intervention.
Hartalega Holdings; Hold; RM7.92Price Target: RM7.70; HART MK
Taking a breather
TP raised to RM7.70 pegged to 13x CY12 EPS led by better growth visibility. Lower latex prices to have marginal impact on EPS as latex glove segment is small (10%); expect flat 3Q12, margins still under pressure. Downgrade to Hold on limited share price upside.
Top Glove Corporation; Hold; RM5.00
Price Target: RM4.80; TOPG MKValuation setback
Cut latex price assumptions by 8% and raised FY12-14F EPS by 2-3%. FY12 will be a recovery year with lower latex costs and better sales mix. Raised TP to RM4.80 pegged to 15.5x CY12 EPS; expectations of margin recovery and stronger earnings have been priced in; Maintain Hold.
Kossan Rubber Industries; Hold; RM3.44
Price Target: RM3.30; KRI MKPositives priced in
Cut latex price assumptions by 8% and raised FY13/14 EPS by 2-3%; FY11 earnings intact. Expect flat earnings in 4Q1. Raised TP to RM3.30 pegged to 9x CY12 EPS; Maintain Hold as positives have been priced in.
Source: HwangDBS Research 17 Feb 2012
December 20, 2011
Margin recovery for rubber gloves in 2012
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Larger Smaller Reset Rubber gloves
Latex is trading below RM7 per kg mainly due to softer demand from tyre manufacturers and traders in China affected by tighter credit. Assuming raw material prices remain low and cost savings are retained (instead of passing them on to customers), we expect glovemakers' earnings and margins will recover substantially.
We believe they will certainly try to retain as much of the savings as possible, after having absorbed higher raw material costs previously. Our sensitivity analysis shows that every 1% drop in raw material cost could lift earnings by'' about 3% (assuming all cost savings are retained).
The US dollar has strengthened against the ringgit to 3.15 (+7% from August 2011's low of 2.97) and this will translate to higher export revenue. Our sensitivity analysis shows that every 1% increase in the greenback against the ringgit could lift earnings by about 5%.
Glovemakers are likely to hedge their US dollar exposures, and given the volatile currency trend this could give rise to wide fluctuations in translation gains or losses upon maturity or marking-to-market.
We remain cautious on the sustainability of current raw material prices. As such, we are maintaining our 2012 latex and nitrile price assumptions (average of RM8.30 per kg for latex and RM5.20 per kg for nitrile) for now. The start of the wintering season from February to May, when latex production is usually lower, coupled with potential pent up demand from car manufacturers could drive up latex and synthetic rubber prices again.
At this juncture, it is still early to impute a strong earnings rebound for Kossan Rubber Industries Bhd and Hartalega Holdings Bhd, while our earnings forecast for Top Glove Corp Bhd is at the higher end of consensus estimates. We like Hartalega ('buy', target price: RM6.50) for its superior operating margins (27% against 16% industry average) and return on equity (36% against 22% industry average).
We maintain 'hold' for Top Glove (TP: RM4.05) and Kossan (TP: RM2.70). The key to margin recovery is sustainability of raw material prices, which could trigger upgrades. ' HwangDBS Vickers Research, Dec 20
This article appeared in The Edge Financial Daily, December 21, 2011.
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 2.70 |
Larger Smaller Reset Rubber gloves
Latex is trading below RM7 per kg mainly due to softer demand from tyre manufacturers and traders in China affected by tighter credit. Assuming raw material prices remain low and cost savings are retained (instead of passing them on to customers), we expect glovemakers' earnings and margins will recover substantially.
We believe they will certainly try to retain as much of the savings as possible, after having absorbed higher raw material costs previously. Our sensitivity analysis shows that every 1% drop in raw material cost could lift earnings by'' about 3% (assuming all cost savings are retained).
The US dollar has strengthened against the ringgit to 3.15 (+7% from August 2011's low of 2.97) and this will translate to higher export revenue. Our sensitivity analysis shows that every 1% increase in the greenback against the ringgit could lift earnings by about 5%.
Glovemakers are likely to hedge their US dollar exposures, and given the volatile currency trend this could give rise to wide fluctuations in translation gains or losses upon maturity or marking-to-market.
We remain cautious on the sustainability of current raw material prices. As such, we are maintaining our 2012 latex and nitrile price assumptions (average of RM8.30 per kg for latex and RM5.20 per kg for nitrile) for now. The start of the wintering season from February to May, when latex production is usually lower, coupled with potential pent up demand from car manufacturers could drive up latex and synthetic rubber prices again.
At this juncture, it is still early to impute a strong earnings rebound for Kossan Rubber Industries Bhd and Hartalega Holdings Bhd, while our earnings forecast for Top Glove Corp Bhd is at the higher end of consensus estimates. We like Hartalega ('buy', target price: RM6.50) for its superior operating margins (27% against 16% industry average) and return on equity (36% against 22% industry average).
We maintain 'hold' for Top Glove (TP: RM4.05) and Kossan (TP: RM2.70). The key to margin recovery is sustainability of raw material prices, which could trigger upgrades. ' HwangDBS Vickers Research, Dec 20
This article appeared in The Edge Financial Daily, December 21, 2011.
November 18, 2011
Kossan Rubber Industries RM3.07: Buy
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Staging an earnings recovery Shariah-compliant
Marked QoQ improvement. 9M11 net profit of RM68m (-24% YoY)was below expectations, at 67-68% of our and consensus full-yearestimates. Our 2011-13 EPS forecasts is cut by 8-12% on lower salesassumption. Nevertheless, 3Q11 earnings has outperformed the latexfocusedpeers with its net profit rising by 13% QoQ. We think the recentsharp drop in latex cost (-18% MoM) is a fresh catalyst to the stock and2013 PER valuation of 8.4x is undemanding. Maintain Buy, with amarginally lower DCF-derived TP of RM3.50 (from RM3.60).
Maybank research (18 November 2011)
Click here for full report ''
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 3.07 |
Staging an earnings recovery Shariah-compliant
Marked QoQ improvement. 9M11 net profit of RM68m (-24% YoY)was below expectations, at 67-68% of our and consensus full-yearestimates. Our 2011-13 EPS forecasts is cut by 8-12% on lower salesassumption. Nevertheless, 3Q11 earnings has outperformed the latexfocusedpeers with its net profit rising by 13% QoQ. We think the recentsharp drop in latex cost (-18% MoM) is a fresh catalyst to the stock and2013 PER valuation of 8.4x is undemanding. Maintain Buy, with amarginally lower DCF-derived TP of RM3.50 (from RM3.60).
Maybank research (18 November 2011)
Click here for full report ''
September 13, 2011
Top Glove slides further on bleak outlook
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Stock Name: HARTA
Company Name: HARTALEGA HOLDINGS BHD
Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
KUALA LUMPUR: TOP GLOVE CORPORATION BHD [] shares extended their losses on Tuesday, Sept 13 as analysts maintained a negative outlook for the sector as there were no strong catalysts to boost glove demand as well as profit margin, in the absence of a pandemic.
At 9.15am, Top Glove fell 18 sen to RM4.10 with 155,300 shares traded.
MIDF Research in a note Sept 12 maintained its Sell call for Top Glove with unchanged target price of RM4.18 due to escalating latex price, huge exposure to latex glove segment (the demand of which is still weak) and appreciation of ringgit against the US dollar.
'Meanwhile, we have Neutral call for Kossan with target price of RM3.04. Our top pick is still Hartalega (BUY, TP: RM6.36), which we continue to like given its high composition of nitrile output, better earnings growth and intact pricing power,' it said.
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: MIDF | Price Call: HOLD | Target Price: 3.04 |
Stock Name: HARTA
Company Name: HARTALEGA HOLDINGS BHD
| Research House: MIDF | Price Call: HOLD | Target Price: 6.36 |
Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
| Research House: MIDF | Price Call: HOLD | Target Price: 4.18 |
KUALA LUMPUR: TOP GLOVE CORPORATION BHD [] shares extended their losses on Tuesday, Sept 13 as analysts maintained a negative outlook for the sector as there were no strong catalysts to boost glove demand as well as profit margin, in the absence of a pandemic.
At 9.15am, Top Glove fell 18 sen to RM4.10 with 155,300 shares traded.
MIDF Research in a note Sept 12 maintained its Sell call for Top Glove with unchanged target price of RM4.18 due to escalating latex price, huge exposure to latex glove segment (the demand of which is still weak) and appreciation of ringgit against the US dollar.
'Meanwhile, we have Neutral call for Kossan with target price of RM3.04. Our top pick is still Hartalega (BUY, TP: RM6.36), which we continue to like given its high composition of nitrile output, better earnings growth and intact pricing power,' it said.
September 8, 2011
Rubber gloves show signs of turnaround in 2Q
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Rubber gloves
Maintain overweight: After four sequential quarters of earnings decline, rubber glove manufacturers posted their first quarter-on-quarter (q-o-q) growth in 2QCY11. Aggregate core net profit for Top Glove Corp Bhd, Supermax Corp Bhd, Kossan Rubber Industries Bhd and Hartalega Sdn Bhd grew by 2.2% q-o-q, on the back of a 7.9% q-o-q increase in revenue.
Hartalega reported another strong quarter ' core net profit grew by 4.5% q-o-q, attributed primarily to higher sales volume (9.3% q-o-q) and higher average selling prices (7.4% q-o-q). Excluding Hartalega, aggregate earnings of natural rubber glove manufacturers grew, albeit by a marginal 0.6% q-o-q.
The 2QCY11 results for natural rubber glove manufacturers were largely characterised by: (i) lower latex prices. Average latex prices slid by 4.3% q-o-q in 2QCY11, easing cost pressure; (ii) improvement in earnings before interest and tax (Ebit) margins. Top Glove's Ebit margin remained steady at 6.4% (1QCY11: 6.4%), while Supermax added 0.4 percentage points to 8% (1QCY11: 7.6%); and (iii) lower than usual utilisation rates, specifically for Kossan and Supermax, due to the closure of certain plants for upgrading and refurbishment. Utilisation rates should gradually revert back to normal by 4QCY11.
As our earnings forecasts were up to 24% below consensus prior to the August 2011 reporting season, results were largely within our expectations though below consensus. Kossan, however, was below our expectation due to lower than expected utilisation rate. We made no changes to our earnings forecasts for Top Glove and Hartalega.
For Kossan, taking into account the lower utilisation rate and lower than expected 2QCY11 results, our FY11 to FY13 net earnings forecasts were cut by between 5% and 14%.
We make no change to our FY11 core net profit forecast of RM110 million for Supermax. After factoring in the delay of Glove City to FY14 and the addition of two new plants between FY12/FY13, our FY12/FY13 net earnings forecasts were lowered by 7% to 9%.
With signs of recovery finally emerging, we maintain our 'overweight' stance on the sector. We expect glove manufacturers' sequential earnings to improve on the back of: (i) lower and less volatile latex prices; (ii) higher utilisation rates as well as increased production as additional capacity expansion comes onstream in 4QCY11, and; (iii) continued steady demand growth.
Hartalega ('buy', target price: RM7.33) is our top pick for the sector, for: (i) its high Ebit margin of above 30%; (ii) insulation from volatile latex prices, and; (iii) consistent earnings delivery and strong operational efficiency. We also maintain our 'buy' recommendations for Supermax (TP: RM4.36) and Kossan (TP: RM4.18) on attractive valuations. Top Glove remains a 'reduce' (TP: RM4.62). ' Affin IB Research, Sept 8
This article appeared in The Edge Financial Daily, September 9, 2011.
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: AFFIN | Price Call: BUY | Target Price: 4.18 |
Rubber gloves
Maintain overweight: After four sequential quarters of earnings decline, rubber glove manufacturers posted their first quarter-on-quarter (q-o-q) growth in 2QCY11. Aggregate core net profit for Top Glove Corp Bhd, Supermax Corp Bhd, Kossan Rubber Industries Bhd and Hartalega Sdn Bhd grew by 2.2% q-o-q, on the back of a 7.9% q-o-q increase in revenue.
Hartalega reported another strong quarter ' core net profit grew by 4.5% q-o-q, attributed primarily to higher sales volume (9.3% q-o-q) and higher average selling prices (7.4% q-o-q). Excluding Hartalega, aggregate earnings of natural rubber glove manufacturers grew, albeit by a marginal 0.6% q-o-q.
The 2QCY11 results for natural rubber glove manufacturers were largely characterised by: (i) lower latex prices. Average latex prices slid by 4.3% q-o-q in 2QCY11, easing cost pressure; (ii) improvement in earnings before interest and tax (Ebit) margins. Top Glove's Ebit margin remained steady at 6.4% (1QCY11: 6.4%), while Supermax added 0.4 percentage points to 8% (1QCY11: 7.6%); and (iii) lower than usual utilisation rates, specifically for Kossan and Supermax, due to the closure of certain plants for upgrading and refurbishment. Utilisation rates should gradually revert back to normal by 4QCY11.
As our earnings forecasts were up to 24% below consensus prior to the August 2011 reporting season, results were largely within our expectations though below consensus. Kossan, however, was below our expectation due to lower than expected utilisation rate. We made no changes to our earnings forecasts for Top Glove and Hartalega.
For Kossan, taking into account the lower utilisation rate and lower than expected 2QCY11 results, our FY11 to FY13 net earnings forecasts were cut by between 5% and 14%.
We make no change to our FY11 core net profit forecast of RM110 million for Supermax. After factoring in the delay of Glove City to FY14 and the addition of two new plants between FY12/FY13, our FY12/FY13 net earnings forecasts were lowered by 7% to 9%.
With signs of recovery finally emerging, we maintain our 'overweight' stance on the sector. We expect glove manufacturers' sequential earnings to improve on the back of: (i) lower and less volatile latex prices; (ii) higher utilisation rates as well as increased production as additional capacity expansion comes onstream in 4QCY11, and; (iii) continued steady demand growth.
Hartalega ('buy', target price: RM7.33) is our top pick for the sector, for: (i) its high Ebit margin of above 30%; (ii) insulation from volatile latex prices, and; (iii) consistent earnings delivery and strong operational efficiency. We also maintain our 'buy' recommendations for Supermax (TP: RM4.36) and Kossan (TP: RM4.18) on attractive valuations. Top Glove remains a 'reduce' (TP: RM4.62). ' Affin IB Research, Sept 8
This article appeared in The Edge Financial Daily, September 9, 2011.
August 25, 2011
Kossan: Dismal earnings at half-time
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Kossan Rubber Industries Bhd
(Aug 25, RM2.71)
Maintain hold at RM2.78 with revised fair value of RM3.54 (from RM3.71): We maintain our 'hold' rating on Kossan Rubber Industries but with a lower fair value of RM3.54 (RM3.71 previously), post 4%-16% downward earnings revisions on dismal 2QFY11 results.
Kossan's 2QFY11 net profit of RM21 million missed both our and market expectations. Net profit of RM44 million (year-on-year: -27%) at half-time accounted for only 38% of our full-year forecast and 37% of consensus.
The group posted a sequentially higher revenue for 2QFY11, up 8% quarter-on-quarter (q-o-q) on an upward revision to average selling price (ASP). However, volume of gloves sold declined to about two billion pieces versus an average of 2.2 billion previously, given the lack of a meaningful improvement in demand for natural rubber (NR) gloves. Production mix for NR is still a high of 57%, while the balance is in synthetic variants.
Further margin normalisation was seen this quarter, with earnings before interest, tax, depreciation and amortisation (Ebitda) margin declining 2.1 percentage points q-o-q to 13%. We suspect the business operating environment remains competitive with price undercutting activities rife, particularly within the basic NR glove segment.
The earnings underperformance mimics the trend seen in recent results of peers, underpinning our long-standing view that it may be too premature to turn constructive on the sector.
On the flipside, the group's strategy in focusing on better margin glove variants would reduce its exposure to latex price volatility. The group aims to boost production of synthetic gloves from 43% to about 60% moving forward. As it is, production mix of synthetic gloves as at August has increased to 50%. Synthetic gloves, namely nitrile variants, use butadiene as the main input.
All in, we cut our earnings forecasts by 16% for FY11F, and a smaller 3% to 4% for FY12F-13F, following lower margin assumptions, lower utilisation rates and revised latex prices. We are now projecting FY11F net profit to contract 15% year-on-year (y-o-y), before rebounding by 19% y-o-y in FY12F.
For exposure to the rubber gloves sector, we prefer Kossan for its more balanced product mix and cheap valuation. Current valuation is attractive, with the stock trading at a forward PE of 7.5 times. Our valuation continues to peg FY12F earnings to a fair PE of 10 times ' at a 30% discount to its 10-year mean. ' AmResearch, Aug 25
This article appeared in The Edge Financial Daily, August 26, 2011.
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: AMMB | Price Call: HOLD | Target Price: 3.54 |
Kossan Rubber Industries Bhd
(Aug 25, RM2.71)
Maintain hold at RM2.78 with revised fair value of RM3.54 (from RM3.71): We maintain our 'hold' rating on Kossan Rubber Industries but with a lower fair value of RM3.54 (RM3.71 previously), post 4%-16% downward earnings revisions on dismal 2QFY11 results.
Kossan's 2QFY11 net profit of RM21 million missed both our and market expectations. Net profit of RM44 million (year-on-year: -27%) at half-time accounted for only 38% of our full-year forecast and 37% of consensus.
The group posted a sequentially higher revenue for 2QFY11, up 8% quarter-on-quarter (q-o-q) on an upward revision to average selling price (ASP). However, volume of gloves sold declined to about two billion pieces versus an average of 2.2 billion previously, given the lack of a meaningful improvement in demand for natural rubber (NR) gloves. Production mix for NR is still a high of 57%, while the balance is in synthetic variants.
Further margin normalisation was seen this quarter, with earnings before interest, tax, depreciation and amortisation (Ebitda) margin declining 2.1 percentage points q-o-q to 13%. We suspect the business operating environment remains competitive with price undercutting activities rife, particularly within the basic NR glove segment.
The earnings underperformance mimics the trend seen in recent results of peers, underpinning our long-standing view that it may be too premature to turn constructive on the sector.
On the flipside, the group's strategy in focusing on better margin glove variants would reduce its exposure to latex price volatility. The group aims to boost production of synthetic gloves from 43% to about 60% moving forward. As it is, production mix of synthetic gloves as at August has increased to 50%. Synthetic gloves, namely nitrile variants, use butadiene as the main input.
All in, we cut our earnings forecasts by 16% for FY11F, and a smaller 3% to 4% for FY12F-13F, following lower margin assumptions, lower utilisation rates and revised latex prices. We are now projecting FY11F net profit to contract 15% year-on-year (y-o-y), before rebounding by 19% y-o-y in FY12F.
For exposure to the rubber gloves sector, we prefer Kossan for its more balanced product mix and cheap valuation. Current valuation is attractive, with the stock trading at a forward PE of 7.5 times. Our valuation continues to peg FY12F earnings to a fair PE of 10 times ' at a 30% discount to its 10-year mean. ' AmResearch, Aug 25
This article appeared in The Edge Financial Daily, August 26, 2011.
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