Hot Stock Kossan up 4.6% on 3Q results, upgrades

by **Cals** Mon 25 Nov 2013, 14:09

Hot Stock Kossan up 4.6% on 3Q results, upgrades

Business & Markets 2013

Written by Zatil Husna of theedgemalaysia.com

Monday, 25 November 2013 10:44

KUALA LUMPUR (Nov 25): Kossan Rubber Industries Bhd rose 15 sen or 4.6% on analysts' upgrades. This follows announcement of the rubber glove manufacturer's third quarter results.

At 10.25am, Kossan was traded at RM3.42 with some 183,000 shares done. The stock was the exchange's ninth-largest gainer.

Last Friday, Kossan reported a profit of RM35.4 million for the third quarter ended September 30, 2013. This is a 21.15% increase from RM29.2 million a year earlier.

The group also announced a tax-exempt interim dividend of 3.5 sen a share.

Alliance Research has raised its target price (TP) on Kossan shares to RM4.29 from RM4.05 while maintaining its "strong buy" call for the stock.

“In view of 3 consecutive quarters of impressive results, we raise our FY13-FY15 forecasts by 4.3%, 6.4% and 5.6% respectively. The main factor for the earnings upgrade is improving margin led by improved production efficiency.

“Post adjustments, our FY14 and FY15 earnings are 4.1% and 13.9% higher than consensus full-year forecasts. As such, we reiterate our "strong buy" call on Kossan with higher TP of RM4.29 (+5.8%),” Alliance said in a note today.

For comparison, Affin Investment Bank maintained its "buy" call on Kossan with an unchanged TP of RM4.20. Affin said Kossan’s
nine-month profit came in within expectations.

“Kossan is backed by the resilient growth in demand from the healthcare industry, favourable raw material prices, Kossan’s increasing plant automation to boost operating efficiencies and management’s efforts in ramping up its special purpose gloves, we remain positive on the group’s earnings prospects,” Affin said in a note.