Kossan Rubber Industries / Lim Kuang Sia

[winston]

not vested

2Q Results

Revenue: +11%; RM 430m
EPS: 0.0123; RM 31m
Net Asset: Rm 1.51

https://www.bursamalaysia.com/market_in ... id=3475845

[winston]

vested

Huge cash pile; U/G to Hold

We upgrade Kossan Rubber from Reduce to Hold with a slightly lower TP of RM2.06, changing our valuation methodology from P/BV multiple to GGM.

We lift FY24F EPS by 4% and cut FY25-26F EPS by 6-7% as we account for the US import tariff on China-made gloves’ impact, and stronger RM vs. US$.

The stock is currently trading at an ex-cash 16.2x FY25F P/E vs. FY15-19 average of 23x.

Its current net cash position translates to RM0.80 per share.

Source: CIMB

https://rfs.cgsi.com/api/download?file= ... 2C7997ADCA

[winston]

not vested

ESG 2.0: Significant improvement in scoring

ESG scoring improves to above average, at 53/100

We revisited KRI’s ESG disclosures following the release of its FY23 Annual and Corporate Governance Reports and assigned an above-average ESG score of 53 (out of 100), marking a significant improvement from its previous score of 38 (below average).

However, more specific and measurable medium-term ESG targets would be well-received.

We maintain our earnings forecasts, MYR2.57 TP (on 1.7x FY26E P/B). BUY.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/416315.pdf

[winston]

not vested

Expect a stronger 4Q24
Below expectations; 8sen interim & special DPS

KRI’s 3Q24 core net profit of MYR22m (-62% YoY, -19% QoQ) was below our and consensus estimates.

We, however, expect stronger earnings in 4Q24 due to increased sales volume and better ASP as well as stablising USD/MYR rate.

We lower FY24/25/26E earnings by 4-9%.

Our new TP is MYR2.49 (8sen; on unchanged 1.7x FY26E P/B).

We continue to like KRI’s strong balance sheet and more diversified income stream. Maintain BUY.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/419434.pdf

[winston]

3Q24: Commendable Capital Management As Expected

Kossan reported a decline in its 3Q24 core numbers.

The earnings weakness mainly stemmed from unprecedented forex headwinds and higher input costs, dragging overall margins in 3Q24.

Nevertheless, key catalysts such as higher volume sales, a sustainable ASP uptrend, and the positive backdrop from escalating US-China trade tensions will continue to support a sequential earnings uptick moving forward.

In view of its better capital management, we maintain BUY with a higher target price of RM2.65.

Source: UOBKH

chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://39646150.fs1.hubspotusercontent-na1.net/hubfs/39646150/Research/Kossan%20Rubber%20(KRI%20MK)%20241118.pdf?utm_medium=email&_hsenc=p2ANqtz-_0hE-54VMTwY7fz4M5VhWJpANK_InRHo3my-GGxTXibqA6cybR9DcKJJB9twwOrxREmqM_8BWX6IXbnOk5Vw2-fu56LA&_hsmi=334352819&utm_content=334352819&utm_source=hs_email

[winston]

Kossan Rubber - Bright Prospect Showcased Well; D/G To NEUTRAL
Date: 2025-01-09
Firm: RHB
Price Target: 2.60

D/G to NEUTRAL from Buy, with an unchanged MYR2.60 TP (DCF), 4% upside.

Kossan Rubber remains in a sweet spot to benefit from the potential trade diversions stemming from the US raising tariff rates on China imports.

However, its earnings recovery prospect may be dampened by the glove makers' inability to arbitrage against higher import tariffs.

Limited ASP-cost spread persists, which may take time to recover, and possible front-loading activities by the US may undermine 1H25 sales volume.

Our TP incorporates a 4% discount, as Kossan's ESG score is below the country median.

Source: RHB

https://klse.i3investor.com/web/priceta ... arch/74105

[winston]

Kossan Rubber Industries Berhad - Costs Spiked in 3Q24
Date: 2024-11-18
Firm: TA
Price Target: 2.68

Kossan Rubber Industries Berhad’s (Kossan) 9M24 net profit of RM92.3mn was below our expectations but within consensus forecasts, accounting for 48.8% and 71.5%, respectively.

The variance was largely due to higher-than-expected operating costs.

QoQ, 3Q24 net profit dipped 6.1% to RM29.4mn despite higher revenue of 18.0% to RM507.4mn.

We attribute the weaker performance to TRP and clean-room segments.

Kossan’s TRP division saw a 24.1% QoQ revenue increase, but its PBT plunged 48.8% to RM5.4mn due to the drastic appreciation of Ringgit against the USD.

Additionally, the cleanroom division PBT declined by 20.9% to RM2.0mn on the back of higher raw material costs.

Positively, the gloves division recorded a higher PBT of RM35.7mn in 3Q24, compared to RM22.1mn in 2Q24.

The stronger performance was driven by a 16.6% increase in sales, reaching RM411.8mn, due to the carryover of delayed shipments from the preceding quarter, although partially offset by the strengthening of the Ringgit.

The commendable 9M24 performance is primarily driven by the gloves division. The glove division PBT stood at RM78.6mn, compared to an LBT of RM15.8mn in 9M23, boosted by higher sales volume and improved operating efficiency.

The board declared a first interim dividend of 2.0sen and a special dividend of 6.0sen per share, bringing total dividend for 9M24 to 8.0sen per share (vs. 4.0sen in FY23).

Source: TA

https://klse.i3investor.com/web/priceta ... arch/73306

[winston]

4Q Results

Revenue: +30%; RM 518m
EPS: 35x; RM 28m; 1.09
Net Asset: RM 1.43

https://www.bursamalaysia.com/market_in ... id=3525195

https://disclosure.bursamalaysia.com/Fi ... TTACHMENTS

[winston]

not vested

4Q24: Misses Expectations But Delivers Steady Profitability

Kossan reported commendable 4Q24 core numbers.

The earnings strength mainly stemmed from higher volume sales, a sustainable ASP uptrend, and a positive backdrop from escalating US-China trade tensions.

Nevertheless, forex headwinds and higher operating costs dampened gloves margins in 4Q24.

Moving into 2025, we assess potential earnings softening in 1Q25, but remain positive on the full-year outlook and better capital management.

Upgrade to BUY but with a lower target price of RM2.52.

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email

[winston]

not vested

Focusing on cost efficiency and technology

Profit fell short KRI's 4Q24 core net profit of MYR24m (-19% YoY, +9% QoQ) fell short of expectations due to higher-than-anticipated operating expenses.

KRI has been prioritising efficiency over volume, focusing on automation and technology.

We have adjusted our FY25/26 earnings forecasts by +31%/17%.

Our new TP is MYR1.99 (-50 sen), reflecting a lower FY26E PBV of 1.4x (from 1.7x) to account for supply risks anticipated from 2H26 onwards.

Reiterate HOLD.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/437884.pdf