Kossan's Q1 core profit exceeds estimates, analyst raises FY25 outlook
The firm said the glovemaker's core profit after tax and minority interest (PATMI) of RM31.9 million, up 29.1 per cent year-on-year, exceeded its own full-year forecast by 26 per cent but within consensus' projection of 20 per cent.
The stronger earnings were driven by higher revenue and profit before tax margin from the glove and clean-room segment.
Therefore, HLIB Research raised its financial year 2025 (FY25) profit by 23 per cent to mainly account for higher average sales price (ASP) and profit before tax margin assumptions for the glove and clean-room segment.
"However, we conservatively maintain our FY26 forecast, which we deem reasonable under the current outlook. Besides, we introduce a FY27 core PATMI of RM264.8 million, representing a 13 per cent year-on-year increase," it said in a note.
Despite stronger earnings in Q1, HLIB Research expects Kossan to deliver relatively flat earnings in the second quarter (Q2), followed by a stronger performance in the second half of the financial year 2025 (2HFY24).
The firm pointed out that the glove and clean-room segment is expected to post flattish quarterly sales volume as US customers are still sitting on excessive inventories built up from 4QFY2, noting that a more meaningful restocking cycle is only anticipated in 2HFY25.
On pricing, it expects Kossan to lower the ASP around US$0.5-1.0 each 1000 pieces in Q2, primarily reflecting the pass-through of lower nitrile butadiene rubber prices in Q1 amid intense competition.
"Despite the ringgit's recent strength against the US dollar since late April, increasing by three point 3.0 per cent, we expect this segment to deliver relatively flat quarter-on-quarter earnings, primarily supported by a further moderation in raw material costs in Q2.
"For the total rubber product segment, a flattish sequential performance is anticipated. Overall, the group's earnings are expected to remain steady in Q2, with a gradual recovery expected in the following quarters," the firm added.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Malaysian Reserve
18 hours ago
- Malaysian Reserve
Hartalega's 1Q profit down 60% amid weak demand, pricing pressure
HARTALEGA Holdings Bhd posted a net profit of RM12 million for the first quarter ended June 30, 2025 (1QFY2026), down 60.5% from RM31.9 million a year earlier, as average selling prices (ASPs) and sales volumes continued to decline. Revenue slipped 5.3% year-on-year to RM553 million, compared to RM583.8 million in 1QFY2025. Profit before tax came in at RM14 million, the group said in a statement. The weaker performance was attributed to deferred orders from US buyers, who are managing front-loaded inventories and responding cautiously to ongoing US tariff developments. Hartalega also cited pricing pressure in non-US markets, particularly due to excess supply from Chinese manufacturers. Operating profit was further impacted by the strengthening ringgit, lower ASPs, and weaker cost absorption resulting from reduced capacity utilisation. 'The first quarter reflects the ongoing recalibration taking place in the global glove sector,' said Hartalega CEO Kuan Mun Leong in a statement. 'With overcapacity still persisting and operating costs rising, competition remains intense, especially from China and other regional manufacturers.' He added that US tariff uncertainty is weighing on demand and prompting a shift in sourcing strategies among US importers. 'Nevertheless, we are anchored by our long-term strategy, focusing on enhancing production efficiency and cost optimisation, investing in advanced automation, maintaining robust fiscal discipline, and sharpening our sales approach,' Kuan said. Despite the near-term challenges, Hartalega remains positive on long-term demand, driven by global healthcare needs and rising hygiene awareness. — TMR
New Straits Times
2 days ago
- New Straits Times
Bleak outlook for media sector as Adex slumps
KUALA LUMPUR: The media sector is expected to remain weak in the second half of 2025, weighed down by ongoing structural challenges and subdued advertising expenditure (adex), said HLIB Research. The industry continues to struggle with the rapid decline of traditional media, while digital transformation efforts have delivered slow and uneven results. "Adex remains subdued, weighed down by cautious global sentiment and tighter corporate marketing budgets," it said in a note. "While monetisation of digital platforms is growing, it still lags the sharp decline in legacy revenue streams." Adex across all segments has been disappointing. Nielsen data showed total adex from January to May this year shrank 17 per cent compared to the same period last year, reflecting ongoing market weakness. Digital adex, once a bright spot, plunged 47 per cent, suggesting advertisers are cutting back across all platforms. Other media segments also suffered declines: free-to-air television adex fell by six per cent, newspapers by 12 per cent, magazines by 10 per cent, radio by 23 per cent and cinema by a staggering 50 per cent. "That said, there is potential for a modest uplift in the second half, supported by the upcoming Sabah state election by January 2026 and pre-promotional activities ahead of the Visit Malaysia 2026 campaign," the firm said. While both Media Prima Bhd and Astro Malaysia Bhd have made digital investments through REV Media and digital content platforms respectively, HLIB Research said these initiatives have yet to translate into material gains. "The overall share of digital advertising captured by local players remains small compared to global tech giants like Meta, Google and TikTok. "These international platforms dominate digital ad spend due to their superior targeting capabilities and vast user bases, leaving Malaysian companies with limited bargaining power and thinner margins," it said. HLIB Research added that monetising digital content remains a challenge, especially in a market where consumers are reluctant to pay for online media.
The Star
2 days ago
- The Star
Strong 2Q showing forecast for planters
PETALING JAYA: Plantation companies will likely report another decent set of performance on a quarter-on-quarter (q-o-q) basis in the upcoming second quarter of financial year 2025 (2Q25) results season, despite anticipation of mixed sequential improvement. Hong Leong Investment Bank (HLIB) Research in its 2Q25 results preview expects planters' performance to be supported by a recovery in the fresh fruit bunch (FFB) output amid relatively stable palm oil prices. On a q-o-q basis, the brokerage firm expects plantation companies under its coverage to record FFB output growth ranging from 3.5% to 46%, driven primarily by seasonal factors and more conducive weather conditions. 'Despite the broad-based increase in FFB production, upstream earnings performance was likely mixed, as the output growth registered by some of the planters (such as TSH Resources Bhd and Hap Seng Plantations Holdings Bhd ) were not sufficient to mitigate the q-o-q decline in crude palm oil (CPO) prices and the full cost effect of the minimum wage hike implemented since February 2025,' it pointed out. On the other hand, downstream segment earnings are expected to improve sequentially. 'This will be supported by a narrower export tax and levy differential between Malaysia and Indonesia, and lower feedstock costs, particularly for both CPO and crude palm kernel oil,' added HLIB Research. On a year-on-year (y-o-y) basis, the brokerage firm expects planters to report flattish upstream earnings in 2Q25, as broadly higher FFB output – amid flattish CPO prices – is likely offset by higher labour costs following the minimum wage hike implementation. 'During the quarter, seven out of eight planters under our coverage recorded y-o-y increases in FFB output, primarily driven by yield normalisation,' the brokerage firm said. Note that some planters were impacted by biological tree stress and a shift in cropping patterns last year. As for downstream segment earnings, it could potentially weaken in 2Q25 due to the high earnings base effect CPO export tax and duty differential between Malaysia and Indonesia, along with high palm kernel prices, which will likely curtail margin for oleochemical products. HLIB Research has maintained its 2025-2026 CPO price assumptions of RM4,200 per tonne and RM4,000 per tonne, respectively. It said ample near-term supply of vegetable oils (in particular, CPO and soybean) will cap the near-term CPO price (possibly until 3Q25), before turning more upbeat in 4Q25. Year-to-date, the CPO price has averaged at RM4,342 per tonne. The brokerage firm has kept a 'neutral' stance on the plantation sector due to the lack of significant near-term CPO price re-rating catalysts. For exposure, its top 'buy' picks are IOI Corp Bhd with a target price of RM4.12 and SD Guthrie Bhd with a target price of RM5.15. Meanwhile, HLIB Research has ceased coverage on FGV Holdings Bhd , as the Federal Land Development Authority's stake in FGV had exceeded the minimum 90% threshold and its listing status will be withdrawn from the Main Market of Bursa Malaysia. 'As such, our earnings forecasts, target price of RM1.30 and 'hold' rating should no longer be used as a reference going forward,' it noted.
