Kenanga maintains outperform on Kossan, raises TP to RM4.23

Kenanga maintains outperform on Kossan, raises TP to RM4.23
Business & Markets 2013
Written by Fatin Rasyiqah Mustaza of theedgemalaysia.com
Monday, 08 April 2013 10:41


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KUALA LUMPUR (April 8): Kenanga Research has maintained its ‘outperform’ call on Kossan Rubber Industries at RM3.73 with a higher target price of RM4.23 (from RM3.64) and said the company's shares had surpassed its peers which rose an average 5%.

“We believe Kossan will be further re-rated, fuelled by the positive news flows from its maiden foray into Indonesia to expand its technical rubber products (TRP) division there also its gloves expansion following its new land acquisition,” said the research house in a note Monday.

“We understand that Kossan plans to build two new plants targeting nitrile gloves which are expected to boost capacity by an additional 2.2 billion to 2.4 billion pieces of gloves or 16% bringing total installed capacity to 17.2 billion pieces,” it added.

For the automotive industry, Kossan’s TRP division has experience in producing parts, including anti-vibration application in the forms of mounting bushes and hangers.

According to the research house, new cases of bird flu virus traced in China could further underpin the importance of hygiene and thus potentially increase the demand for examination rubber gloves, which would augur well for Kossan.