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Affin IB Research ups Kossan target price on higher 1Q earnings

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Affin IB Research ups Kossan target price on higher 1Q earnings Empty Affin IB Research ups Kossan target price on higher 1Q earnings

Post by Cals Tue 27 May 2014, 00:37

Affin IB Research ups Kossan target price on higher 1Q earnings
Business & Markets 2014
Written by Jeffrey Tan of theedgemalaysia.com   
Monday, 26 May 2014 11:52

KUALA LUMPUR (May 26): Affin IB Research has maintained its Buy rating on Kossan Rubber Industries Bhd at RM3.90 and raised its target price to RM5.95 (from RM5.08) after the glove manufacturer reported higher earnings in its first quarter financial results.
Last week, Kossan reported net profit rose 11% year-on-year (y-o-y) to RM36.8 million in the first quarter, despite revenue fell 6.4% y-o-y to RM306.2 million.
In a note today, Affin IB research analyst Mandy Teh said Kossan’s results were within her expectations, accounting for 21% of full-year projections.
“With earnings within expectation, we make no changes to our FY14, FY15 and FY16 earnings per share forecasts,” she said, noting Kossan is her top pick in the glove sector.
“We maintain our ‘buy’ rating on Kossan with a higher TP of RM5.95,” she added.
Teh said she continues to like Kossan for its efforts in ramping up its special purpose gloves – surgical and clean room gloves – that typically fetch lucrative margins.
She said the suspension of eight production lines in the first quarter was to transform these lines to interchangeable lines for the production of nitrile gloves.
She added the group’s increasing plant automation will continue to enhance its operating efficiencies.
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