Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Research House: OSK

KUALA LUMPUR: OSK Research is maintaining its overweight recommendation oon the rubber gloves industry although it is now less positive compared with the previous years since some of the prevailing concerns ' of which it had been aware since last year ' have finally reared their ugly heads.

The research house had on Thursday, Aug 12 recommended that investors continue to stick to the bigger rubber glove manufacturers like Top Glove (BUY, TP: RM7.57), Supermax (BUY, TP: RM9.11) and Kossan (BUY, TP: RM5.65) as it believes these companies have the financial muscle to withstand any unexpected future setbacks.

OSK Research said recent developments have cast a cloud over the rubber glove sector, and were met with mixed views on the industry's outlook.

While funds that are still positive on the sector are busy 'shopping'' given that the share prices of most rubber gloves companies have dropped by 10%-20%, those who are neutral are still sitting on their existing shareholdings, which have been bought at a much lower cost.

Meanwhile, some funds are shying away from the sector out of fears stoked by rising concerns on its near term prospects.

'We believe that recent concerns which have crept into investors' radars in a big way did not emerge out of the blue and have probably been made known to them in early 2010.

'These investors, we believe, would have prepared themselves for such negative news when they decided to invest in or hold on to their shares in rubber glove companies. Hence, we do not think the recent negative developments in the sector would have caught investors off-guard,' it said.