Public Investment maintains ‘outperform’ call on Kossan

KUALA LUMPUR: Public Investment Bank has maintained its “outperform” rating on Kossan Rubber Industries Bhd with a target price of RM8.05 per share, following the announcement of its first-quarter results with higher sales volume.

Kossan recorded a pre-tax profit of RM56.33 million for the three months ended March 31, 2017 against RM65.65 million recorded in the same quarter last year, while revenue rose to RM499.9 billion from RM412.2 billion previously.

In a note yesterday, the research house said the overall performance was commendable considering the sharp rise in raw material prices in the quarter reviewed and supported by higher sales volume.

“We continue to like Kossan for its product positioning strategies and efficiency initiatives in tackling mounting cost issues which will see the group through the challenges ahead,” it said.

It added that Kossan had also commenced the construction of a research and development (R&D) centre, slated for completion by September 2017.

Meanwhile, Hong Leong Investment Bank has upgraded Kossan to a “buy” call due to recent share price retracement, with a target price of RM7.13.

The research house said it continued to like Kossan for its management’s extensive engineering experience and continuous investment in R&D/ automation.

As at 12.03 pm, Kossan’’s share price fell 11 sen to RM6.40 with 7,800 shares changing hands. — Bernama