Kossan Rubber Industries; Buy; RM6.31
Price Target: RM7.20; KRI MK

Kossan announced a proposed bonus issue of 319.8m new ordinary shares of RM0.50 each on the basis of one bonus share for every one existing share held. The proposed bonus issue shall be implemented by capitalising up to RM159.9m from the retained earnings account. The proposal is subject to approvals from Bursa and shareholders at EGM, and is expected to be completed by 4Q2013.

The proposed bonus will essentially enlarge Kossan’s share base and is expected to improve its share trading liquidity. There is no change in our earnings forecasts. Our target price of RM7.20 is based on 15x FY14 EPS. Maintain BUY.

Source: HwangDBS Research - 3 Sep 2013