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KLSE: KOSSAN       KOSSAN RUBBER INDUSTRIES BHD
Last Price Avg Target Price   Upside/Downside Price Call
7.68 7.49     -0.19 (2.47%)
* Average Target Price, Price Call and Upside/Downside are derived from Price Targets in the past 6 months.
** Price Targets are adjusted for Bonus Issue, Shares Split & Shares Consolidation (where applicable).
Date Open Price Target Price Upside/Downside Price Call Source News
24/11/2017 7.98 8.05 +0.07 (0.88%) HOLD PUBLIC BANK Price Target News
24/11/2017 7.98 7.57 -0.41 (5.14%) HOLD MIDF Price Target News
24/11/2017 7.98 6.70 -1.28 (16.04%) SELL KENANGA Price Target News
24/11/2017 7.98 7.40 -0.58 (7.27%) HOLD Affin Hwang Capital Price Target News
05/09/2017 7.00 7.10 +0.10 (1.43%) HOLD HLG Price Target News
25/08/2017 7.08 8.05 +0.97 (13.70%) BUY PUBLIC BANK Price Target News
25/08/2017 7.08 7.25 +0.17 (2.40%) HOLD MAYBANK Price Target News
25/08/2017 7.08 6.85 -0.23 (3.25%) HOLD KENANGA Price Target News
25/08/2017 7.08 8.64 +1.56 (22.03%) BUY AMMB Price Target News
25/08/2017 7.08 7.30 +0.22 (3.11%) HOLD Affin Hwang Capital Price Target News


Price Target Research Article/News (past 6 months)
24/11/2017  PUBLIC BANK Kossan Rubber Industries Berhad - Gloves Growth
24/11/2017  MIDF Kossan Rubber Industries - Earnings To Improve With New Capacity In 4Q
24/11/2017  KENANGA Kossan Rubber Industries - Weak 9M17, Stretched Valuations
24/11/2017  Affin Hwang Capital Kossan - Limited Capacity Growth Halts Upside
05/09/2017  HLG Kossan (HOLD) - Land Acquisition in Kuala Langat
25/08/2017  PUBLIC BANK Kossan - Supported By Gloves
25/08/2017  MAYBANK Kossan Rubber Industries - Better Earnings in 2H17
25/08/2017  KENANGA Kossan Rubber - A Decent 1H17, Rich Valuation
25/08/2017  AMMB Kossan Rubber - Earnings flat in 2QFY17
25/08/2017  Affin Hwang Capital Kossan (HOLD, Maintain) - Clearer Skies Ahead



  9 people like this.
 
gong_kia kelvin_ik4u, any idea when is kossan qtr result release?
07/11/2017 10:31
oxxxyxxx I guess is 9cts for this qtr .. hope
07/11/2017 19:04
gong_kia oxxxyxxx: I guess is 9cts for this qtr ?
are u mean u guess 9nov for qtr result release?
08/11/2017 10:17
oxxxyxxx Eps 9cts
08/11/2017 10:22
tsyjj Quater report most release by 20th to 22rd. This quater very goods earning....
08/11/2017 12:46
tsyjj EPS 9 cent, wait n see.....
08/11/2017 12:49
kelvin_ik4u KE Trade Maybank raise Kossan target price to 9.10, based on superb outcoming Q317 result due to better on lower raw material cost & new capacity commercialised in 4Q17, expected +26% growth vs last Qtr result.
Expected Q317 result will be better/equal than EPS 9.0 cents.
16/11/2017 10:50
tsyjj Yes.
16/11/2017 12:38
Ck Wong @kelvin_ik4u ,thanks, can share the rpt here? tq..
16/11/2017 12:44
kelvin_ik4u November 16, 2017

Malaysia Industrials
THIS REPORT HAS BEEN PREPARED BY MAYBANK INVESTMENT BANK BERHAD
SEE PAGE 6 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
PP16832/01/2013 (031128)
Lee Yen Ling
lee.yl@maybank-ib.com
(603) 2297 8691

Kossan Rubber Industries (KRI MK)

New capacity under way
Raising TP; BUY the laggard
Upcoming 3Q17 results could be better on lower raw material costs and
we expect its new capacity in 4Q17 to support its earnings growth ahead.
Maintain our EPS forecasts, projecting 3-year EPS (2016-19) CAGR of 17%.
Given the certainty of the new capacity coming on board to provide the
growth and the present tight glove supply situation, we think the stock
deserves to re-rate to a higher multiple – we now peg a target of 24x on
2018 EPS (+1SD to mean; 19x previously), deriving a new TP of MYR9.10
(+26%). We upgrade the stock to BUY (from HOLD).

3Q17: Expect better earnings Kossan’s 3Q17 results will be released on 24th Nov (next Thursday). We think sales volume of gloves could be flattish QoQ as it is already running
at its full plant utilisation rate of c.85% and had zero new capacity to sell
in the quarter. However, margin may improve on lower raw material cost
(-11-16% QoQ), hence, we expect its earnings to be better in 3Q17
(2Q17: MYR46m, 3Q16: MYR34m, 1H17: MYR92m).

Ramping up Plant 16
Kossan has commercialised 6 lines at Plant 16 (total of 8 lines) in Nov
2017 and upon full commercialisation in Dec 2017, its capacity will rise
to 25b pcs p.a. (+14% from 22b pcs now). Given the present tight supply
environment, the new capacity from Plant 16 is already fully sold and
the capacity could be used for the production of higher margin gloves
(i.e. LowDerma glove). In 2018, Kossan will commercialise its Plant 17
(+1.5b pcs p.a. in 3Q18) and Plant 18 (+3b pcs p.a. in 4Q18).

Raising efficiency and reducing costs
Over the medium term, Kossan may see its margin expands as it raises its
productivity. For example, it plans to reduce its headcount substantially
to <2 workers/m pcs of gloves in 1-2 years (from 3 workers/m pcs now).
Also, it tries to manage its key costs more efficiently (i.e. raw materials,
utilities). We maintain our earnings forecasts, which have assumed for
volume growth of 10%/14%/12% for FY17-19 and slight margin expansion
of 0.8-0.9-ppt in FY18-19 (from FY17).
16/11/2017 13:39
kelvin_ik4u This target price of 9.10 is purely based on PE 24x only, compare to Hartalega it's PE is 35 right now. No doubt Hartalega is highly efficient compare to Kossan & top world leader for nitrile glove. In term of capacity glove growth % rate, Kossan expansion is same as Hartalega, up 30%+ by year end 2018 after plant 16, 17 & 18 fully commercialize. That will boost up Kossan PE market value to readjust to PE 30x, then it can hit beyond TP RM10 by year end if coming Q317 result is within 9cents range. Potential is there!
16/11/2017 14:45
tsyjj Agreed.
16/11/2017 15:11
Kpin Yeoh EPF massive selling last few weeks have been fully absorb by fund manager or may be some retailer. After fully loading in those stock what are the next action?
16/11/2017 15:29
kelvin_ik4u Refer to Kossan listed shareholder, now the 3rd biggest Kossan shareholder is Public mutual fund mgr, suddenly jump upside, overtaking KWAP become 3rd largest shareholder & buy over those EPF share sold.
16/11/2017 15:33
Ck Wong @kelvin_ik4u, when u see this, in 2016 annual report? no. 3 is not public mutual in 2016 annual report.
quote: now the 3rd biggest Kossan shareholder is Public mutual fund mgr
16/11/2017 15:39
Ck Wong sorry, *where, instead of when.
16/11/2017 15:40
Ck Wong what i can see in bursa latest shareholder list, kwap already held 5% and above, so kwap need to start report to bursa this month.
16/11/2017 15:41
kelvin_ik4u CK Wong, what u read is an old news report. Latest up-to-date, KWAP hold 2.8% only (4th shareholder rank), after they sell it. Before that, EPF hold ard 11.0% share holder, then keep on selling for last 1mth. All EPF share sold, it being absorb n buy over by Public mutual fund mgr, that why Kossan price slowly go up after fund mgr finish accumulate it. Now we only see the price start moving.
16/11/2017 15:46
kelvin_ik4u Major shareholders:
Kossan Holdings Malaysia Sdn. Bhd. ----- 51.1%
Employees Provident Fund --------- 8.9%
Public Mutual Bhd. --------- 5.4%
16/11/2017 15:49
Kpin Yeoh ~30% floating stock and majority hold by long term investor.
16/11/2017 16:06
Kpin Yeoh do we have any idea how many percent hold by other fund which is not posted?
16/11/2017 16:09
kelvin_ik4u That why, I strongly hope that Kossan mgmt/CEO really consider my proposal, declare bonus share for more liquidity in the market, on par with Topglove or Hartalega, then it share price can go even further since Kossan mgmt is proven efficient throughout many years.

Previous:
Kossan should announce & give more bonus share. Compare to Topglove & Hartalega, Kossan total share is the market is still small (Kossan 0.68mil vs Topglove 1.26mil vs Harta 1.65mil). Kossan CEO/mgmt should give out 1 bonus share for every 2 share held & 1 free convertible warrant for every 4 shares held by shareholders. The implementation of this proposal will definitely push up the share price due to more share liquidity in market.
16/11/2017 16:14
Kpin Yeoh As usual during closing someone will push down the price.
16/11/2017 17:11
16/11/2017 20:13
ks5S sell your underwear-kah ?
16/11/2017 20:18
tsyjj Keep....
16/11/2017 21:01
kelvin_ik4u Opportunity to collect Kossan when price low, both Topglove & Hartalega is coming up. Don't be fearful when share price drop, it an opportunity to accumulate if re-look on it business growth of 30%+. PE is undervalued vs Hartalega a lot and Kossan just starting its engine now.

Be fearful when others are greedy, and greedy when others are fearful
20/11/2017 11:46
tsyjj Still keep....
20/11/2017 12:08
kelvin_ik4u Warren Buffet's advise:
Seize Great Opportunities and Load Up the Truck
“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.

“The stock market is designed to transfer money from the impatient to the patient investor.”
20/11/2017 13:52
kelvin_ik4u fyi, On 10 November, spot BD prices were assessed at $975/tonne CFR NE Asia, down another by 26% from 6 October, ICIS data reported. These further raw BD price drop make rubber maker, benefit even more vs last Feb when it hit highest of $3019/tonne.

That's mean all glove maker for nitrile glove benefit the most in subsequent months down the road.
20/11/2017 16:37
20/11/2017 18:12
Mohd Fahmi Bin Jaes More keep more down
20/11/2017 18:12
wantocin when fahmi say sell,that mean strong buy.
20/11/2017 21:41
kelvin_ik4u Even Supermax Q317 result QoQ show impressive net profit earning spike 235% jump on preceding Qtr, jump from RM 8.3mil (EPS 1.25cent) to RM 28mil (EPS 4.19cents), due to raw material price drop & refurbish plant efficiency improved. That impressive as moving month to month till now, raw material price keep on falling, further improve overall glove maker profit in coming months.
21/11/2017 14:40
tsyjj 23th, QR good profits
22/11/2017 10:53
Alex Goh Pls take note..currency. USD1 drop to MYR 4.10 now....
23/11/2017 00:37
HowAh The dividend so poor for this counter
23/11/2017 18:59
oxxxyxxx Disappointed!
23/11/2017 19:04
kelvin_ik4u Kossan this Q3 result show still have light, CIMB analyst raise target price to 9.80, another 20% growth due to expansion plant to Jan 2018, still cheap raw material price, robust glove demand, strong earning drive by significant capacity growth 36% by 2018, laggard stock Vs peer, cheaper valuation vs Hartalega (set 20% discount to PE value of Hartalega, based on PE 22.4 CY19)

Perhaps kossan share price can go up instead if keep till end 2018 or if mgmt manage to expedite it's line expansion earlier than 2018.
24/11/2017 08:13
kelvin_ik4u Kossan declared payout dividend of 5cents, ex on 15th Dec. That consider good, annual payout divident 40% of earning, very close to Hartalega 50% divident payout ratio.
24/11/2017 08:21
kelvin_ik4u Kossan Rubber Industries

9M17: Striving ahead
■ We deem 9M17’s net profit of RM137.7m in line, at 69% of our and 64% of
consensus’ FY17 estimates.
■ 9M17 net profit grew 9% yoy mainly due to: i) higher sales volume, ii) increase in
ASPs and iii) better cost control.
■ On a qoq basis, 3Q17 net profit rose 0.4% despite minimal increase in sales volume
and lower ASPs. This was due to margin expansion from lower raw material prices.
■ Full commercial production of Plant 16 has been delayed by three months to 1Q18.
We lower our FY17-19F estimates by 2.9-4.7% to account for this delay.
■ Maintain Add with our TP raised to RM9.80. Our TP is now based on 22.4x CY19 P/E.

9M17 net profit grew 9% yoy; met expectations

9M17 revenue grew 20.3% yoy, thanks to 7% growth in glove sales volume and increase
in average selling prices (ASP) (~9% yoy) to pass on higher raw material costs. However,
9M17 EBITDA margins waned to 15.7% (-1.8% pts yoy), due to: i) lower contribution from
technical rubber product (TRP) segment and ii) start-up costs from Plant 16. Still, 9M17
net profit rose to RM137.7m (9% yoy) aided by lower tax rates of 18.5% (-0.5% pts yoy).
Overall, 9M17 net profit was within expectations, at 69% of our FY17F estimate.
3Q17 net profit flattish on a qoq basis but grew 34.3% yoy

In 3Q17, Kossan reported flattish revenue of RM489.2m (-0.3% qoq) as glove sales grew
minimally while ASPs declined 7-8% qoq. ASPs were adjusted lower to pass on the drop
in raw material prices (NR:-12.5% qoq & NBR -12.2% qoq). 3Q17 EBITDA margins also
expanded to 16.1% (0.6% pts qoq), due to better cost control and margin improvement
from lower raw material costs. As a result, 3Q17 net profit increased to RM45.7m (0.4%
qoq) despite a higher tax rate (+2.6% pts qoq) and increase in interest costs (+21% qoq).

Glove division contributed 87% of 9M17 revenue and 92% of PBT
The strong 9M17 performance was driven by the glove division, whose revenue and PBT
grew 23.3% and 15.3% respectively. This offset the weak results of the technical rubber
product division (9M17 revenue: -2.1% yoy & 9M17 PBT: -45.7% yoy), that was due to
the longer time-lag in passing on higher raw material costs as well as lower demand from
the infrastructure sector. Also, the cleanroom division recorded an improved performance
with a 14% yoy increase in 9M17 revenue and 70.4% yoy growth in PBT.

Plant 16 to be only ready for full commercial production by 1Q18
We note that full commercial production of Plant 16 (3bn p.a. - 8 lines) is deferred by 3-
months to 1Q18. This is due to water supply issues and delays in machine installations.
Presently, 2 lines are operational with the remaining 6 lines to be ramped up by end-Dec
17. Also, construction of 2 new plants have begun, with a new 1.5bn p.a. plant to be
ready at end-2Q18 and a 3bn p.a plant to be completed by 4Q18. We cut our FY17-19F
EPS by 2.9-4.7% to reflect the new timeline with a 3-month delay as buffer.

Maintain Add with a higher TP of RM9.80

We make no changes to our Add call but our TP is raised to RM9.80. This is now based
on 22.4x CY19 P/E, (20% discount to our target P/E for Hartalega) from 19x previously.
Note that we also rolled forward our valuation year to end-2018. Looking ahead, the stock
should re-rate given: i) stronger earnings driven by significant capacity growth, ii) it is a
laggard stock vs. its peers, and iii) robust demand for gloves. Downside risks: lower
ASPs from stiff pricing competition and further delays in expansion plans.
24/11/2017 08:23
Mohd Fahmi Bin Jaes Sell on news
24/11/2017 09:29
tsyjj Keep...
24/11/2017 09:31
kelvin_ik4u Kossan start to rebound from low, buyer start coming back.
24/11/2017 09:33
tsyjj Previous quarter report out, kossan share price dropping too and todsy history repeated. I m keeping......
24/11/2017 10:08
superbull11 go supermx , KOSSAN QR is flat , supermx is undervalue , QR improve , short term T.P 2.40 , flat QR can't go higher
24/11/2017 11:14
27/11/2017 15:20
Mohd Fahmi Bin Jaes www.theedgemarkets.com/article/kossan-ups-stake-cleanera-rm65m-sees-potential-cleanroom-tech-china
05/12/2017 08:14
AsiaEquityResearch https://klse.i3investor.com/blogs/asiaequityresearch/140482.jsp
05/12/2017 15:40
Mohd Fahmi Bin Jaes https://www.bharian.com.my/bisnes/pasaran/2017/12/360264/harga-getah-dunia-dijangka-meningkat
09/12/2017 16:16


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