Kossan shielded from US tariff impact by specialty glove focus
KUALA LUMPUR: Kossan Rubber Industries Bhd is expected to be less affected by the tariff as it focuses on specialty gloves which fetch better margins, said Kenanga Research.
The research house said the current uncertainty over the US tariffs have also resulted in increasing interest from US buyers on Malaysian players as a viable alternative supply source.
Overall, the firm said it does not see a fundamental view change on the gloves sector at these tariff levels.
"With the slash in tariffs, this still implies tariffs on Chinese glove makers at 80 per cent in 2025 and a further 130 per cent in 2026.
"Buyers have been diversifying sources as a risk management strategy, opting to purchase from other countries including Malaysia," it said in a note.
Nevertheless, Kenanga Research said the news on tariffs reduction by the US on Chinese glove makers is negative news flow for local players.
"We believe Kossan is expected to be less affected as it focuses on specialty gloves which fetch better margins.
"Moreover, with its disciplined cost structure and continuous efforts to streamline operations, the group's profitability is expected to be less impacted by any potential orders slowdown," it said.
Meanwhile, Kenanga Research said Kossan's first-quarter net profit for financial year 2025 met expectations, rising 13 per cent to RM36 million.
This accounts for 22 per cent and 23 per cent of the firm's and consensus full-year net profit forecasts, respectively.
No dividend was announced for quarter, which was in line with expectation, Kenanga Research said.
The firm has maintained its earnings forecasts with a target price of RM2.70.
"We believe that in terms of PBV valuation, its share price is trading at a level commensurate with pre-tariff imposition. Reiterate 'outperform'," it added.
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