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NewsKossan still a ‘buy’ despite lower dividend payout, says AmResearch
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Kossan still a ‘buy’ despite lower dividend payout, says AmResearch
by Cals Fri 25 Apr 2014, 02:11
| Kossan still a ‘buy’ despite lower dividend payout, says AmResearch |
| Business & Markets 2014 |
| Written by Jeffrey Tan of theedgemalaysia.com |
| Thursday, 24 April 2014 16:18 |
KUALA LUMPUR (Apr 24): Kossan Rubber Industries Bhd still enjoys a ‘buy’ call with a fair value of RM5.05 by AmResearch, despite the firm having announced a lower dividend payout of 31% yesterday as compared to 37% last year.
The research house also retained its gross dividend per share forecasts for FY14F, FY15F and FY16.
Yesterday, Kossan declared a final tax-exempt dividend of 3.5 sen per share in respect of the financial year ended Dec 31, 2013.
In a note today, AmResearch said it was not ‘surprised’ that the dividend payout came below its estimate of 40% or 9 sen per share.
“We are not surprised given that the group is expanding its capacity to capitalise on the growing demand for nitrile gloves,” said AmResearch analyst Cheryl Tan.
Tan said the glove maker is currently constructing three new nitrile glove plants, which will collectively increase its capacity by about 5 billion pieces or 30% this year to 21 billion pieces per year.
Furthermore, she said the group is also currently constructing a new technical rubber product plant in Jakarta, with positive contribution expected in FY15F onwards.
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