Latest news with #Kossan
New Straits Times
25-05-2025
- Business
- New Straits Times
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.
New Straits Times
23-05-2025
- Business
- New Straits Times
Kossan's Q1 core profit exceeds estimates, analyst raises FY25 outlook
KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB Research) has raised Kossan Rubber Industries Bhd's earnings forecasts following upbeat results in the first quarter of financial year 2025 (Q1FY25). 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.
The Star
22-05-2025
- Business
- The Star
Kossan expects cautious recovery in global glove market in 2025
KUALA LUMPUR: Kossan Rubber Industries Bhd expects to navigate a cautiously improving global glove market in 2025, supported by steady restocking activity and a gradual structural recovery in demand. The glove maker, however, noted that the outlook for the coming months remains mixed, with softer short-term demand expected—particularly in the U.S.—due to uncertainty surrounding ongoing tariff policy shifts. Kossan said the temporary reduction of U.S. tariffs on Chinese-made medical gloves (from 145% to 80% for a 90-day period effective May 12, 2025) has added to the market's uncertainty. 'Average selling prices (ASP) in the U.S. market are expected to decline slightly due to lower raw material costs and intensified competition. 'Meanwhile, Chinese glove manufacturers are aggressively offloading its inventory into non-U.S. markets, contributing to broader shifts in market dynamics,' it said in a filing with Bursa Malaysia. Despite the headwinds, Kossan believed that structural shifts in global supply chains and a stronger focus on quality, compliance, and sustainability would favour Malaysian manufacturers over the medium to long term. In the first quarter ended March 31, Kossan posted a 13.3% higher net profit of RM35.6mil, or earnings per share of 1.40 sen compared with RM31.4mil, or 1.23 sen in the year-ago quarter. Its revenue for the quarter rose to RM487.3mil versus RM451.6mil previously. Kossan remained focused on improving efficiency through automation, digitisation, and upskilling its workforce to manage rising costs and protect margins. The group said its growth strategy continued to centre on sustainability, guided by its Sustainability Blueprint 2035, with clear goals for low-carbon operations, responsible sourcing, and social compliance. 'Backed by a robust balance sheet and an agile production model, the group is well positioned to deliver sustainable growth and long-term value amidst a recovering yet dynamic global landscape,' it added. Kossan expects the technical rubber products division to deliver satisfactory results in FY25, while the cleanroom division is forecasted to perform steadily with confident expectations of satisfactory results.
The Star
25-04-2025
- Business
- The Star
Glove sector faces strain but growth expected
Phillip Capital Research said local glovemakers saw some cost relief as raw material and natural gas prices have eased and are showing signs of stabilising. PETALING JAYA: Phillip Capital Research has turned neutral on the glove sector, as persistent pricing pressure, particularly from Chinese players aggressively expanding into non-United States markets. It downgraded its call on the sector to 'neutral' from 'overweight' as it foresees the volatile demand outlook continues to cloud near-term recovery prospects through 2026. 'We believe global glovemakers may seize the 90-day tariff grace period to capitalise on higher US average selling prices (ASPs),' it added. While temporary restocking could support near-term demand, the broader landscape remains under pressure from persistent global oversupply and limited pricing power. 'We expect cautious capacity additions and order volumes to stay volatile through financial year 2025 (FY25) to FY26, as structural imbalances in supply and demand continue to weigh on prospects for a sustained recovery,' it explained. The research house said local glovemakers saw some cost relief as raw material and natural gas prices have eased and are showing signs of stabilising. However, it pointed out that the extent of decline is unlikely to translate into meaningful margin expansion, given persistent ASP pressure, especially in non-US markets where Chinese players are actively competing on prices. 'Our channel checks suggest buyers quickly push for price reduction whenever input costs fall, placing further strain on margins. 'Although Malaysia's glove ASPs have become more competitive in the United States following the 145% tariff on Chinese gloves, overall pricing remains tight, with ASP/cost spread still narrow at just US$1 to US$2 per 1,000 pieces,' the research house said. Although the ringgit has remained relatively stable around RM4.44 since the middle of last year, it projected the dollar and the ringgit will end the year at US$1:RM4.30, implying potential downside risk from the current level. Based on its sensitivity analysis, every 1% appreciation in ringgit could reduce net profits by 18% for Hartalega Holdings Bhd , 11% for Kossan Rubber Industries Bhd and 5% for Top Glove Corp Bhd . 'That said, most players have cost pass-through mechanisms, allowing for gradual ASP adjustments to help cushion the impact of foreign-exchange fluctuations,' Phillip Capital Research said. It picked Kossan as its preferred stock in the sector but with a lower 12-month target price (TP) of RM2.24 per share from RM3.15, underpinned by its strong operational efficiency, solid fundamentals and robust net cash position that offers room for potential special dividends. The research house pointed out that Kossan stands out with the strongest balance sheet among its peers, with a net cash position of RM1.6bil. This is significantly higher than Hartalega's RM800mil and Top Glove's RM200mil. 'Looking ahead, most glovemakers are guiding for subdued capital expenditure in FY25, suggesting that the cash burn cycle seen during the peak of the supply glut is behind us. 'This signals a stronger emphasis on liquidity preservation. 'In terms of net cash as a percentage of market capitalisation, Kossan takes the lead at 33%, followed by Hartalega at 11%, and Top Glove at 7%,' it added. Phillip Capital Research has maintained its 'hold' calls on Hartalega, with a lower 12-month TP of RM2.27 from RM2.80, and Top Glove, with a TP of 83 sen from RM1.44. 'Although earnings for both companies may see near-term improvement, elevated competition and policy uncertainty are expected to constrain volume growth and hinder margin recovery. 'Key risks to our call include higher/lower-than-expected ASPs, pace of demand recovery, and aggressive capacity expansion by Chinese manufacturers,' it said.
