KUALA LUMPUR, May 27 — MIDF Research has reiterated its “Buy” call on Kossan Rubber Industries Bhd on anticipation of earnings growth for the glove maker.
The projection of better earnings was supported by high demands for glove and in the company’s ability to keep pace with the demands as seen in its expansion plan.
“Moreover, we opine that utilisation rate will not be significantly impacted due to the aggressive expansion going forward as new capacity will be fully taken up within a quarter.
“As the group is targeting to improve its efficiency with the newer plants, we opine that this will further improve profit margins,” it said in a note.
For target price, MIDF has revised it to RM4.53 per share from RM4.62 previously.
Public Invest Research also raised its target price for Kossan Rubber to RM4.30 from RM3.50.
“We upgrade Kossan to “Buy” instead of an outright buy as we are not expecting its Bidor integrated plant to generate meaningful earnings in the near term, perhaps only in Financial Year 2022.
Meanwhile, AmInvestment Bank maintained a “Hold” recommendation on Kossan Rubber but revised its target price lower to RM4.53 from RM4.62.
“Going forward, we believe that Kossan will be facing margin pressures from the heightened competition in the nitrile and natural rubber space as the big rubber glove producers plan to ramp up their nitrile gloves capacity expansion by 14 per cent in Financial Year 2019,” it said in a note. — Bernama
