Industry headwinds unlikely to dissipate soon for Kossan, says HLIB

KUALA LUMPUR (July 27): Hong Leong Investment Bank (HLIB) Research has maintained its “hold” rating on Kossan Rubber Industries Bhd at RM1.33 with an unchanged target price (TP) of RM1.44, and said Kossan’ s 2QFY22 core PATAMI of RM43.4 million (-49% q-o-q; -96% y-o-y) brought 1HFY22 core PATAMI to RM128.2 million (-94% y-o-y).

In a note on Wednesday (July 27), the research house said Kossan’s performance came in within house but was below consensus projections of 48% and 44% respectively.

“We believe industry headwinds are unlikely to dissipate soon, given the oversupply situation that will continue to keep ASPs depressed.

“We make no changes to our earnings projections. [We] maintain 'hold' on Kossan, with an unchanged TP of RM1.44, implying a P/E multiple of 14.9x on its FY23F EPS of 9.7 sen,” it said.