Latest news with #Kossan
New Straits Times
21-07-2025
- Business
- New Straits Times
Kossan stands out as HLIB's sole 'Buy' in glove sector
KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB) has maintained its "Neutral" stance on the glove sector for the second half of 2025 (2H25), with Kossan Rubber Industries Bhd as its sole "Buy"-rated stock. The firm set a target price of RM2.30 for Kossan, and issued a "Hold" rating on Hartalega Holdings Bhd at RM1.48, and a "Sell" call on Top Glove Corp Bhd with a target price of 60 sen. "Kossan distinguishes itself through its differentiated strategies and robust financial footing, against a challenging industry backdrop," HLIB said in a research note today. HLIB said concerns over a supply-demand imbalance in the glove sector remain elevated, driven mainly by the aggressive expansion of Chinese, Vietnamese and Indonesian peers. "Chinese Intco Medical's cost advantages, driven by automation and favourable input economics, continue to underpin its relatively aggressive pricing strategy. "Transhipment flows from China via Thailand, Vietnam, and Indonesia are also displacing Malaysian exports and delaying volume recovery in the US market," it said. HLIB noted that share prices for glove makers fell between 47 per cent and 59 per cent in 1H25, weighed by earnings misses and weak investor sentiment. "Hartalega and Kossan missed both quarterly and consensus expectations in February, while Top Glove also reported below-par results in March. "Investor confidence was further undermined by another round of earnings misses from Hartalega, coupled with a more bearish industry outlook guidance. "We believe that the muted US demand faced by Malaysian manufacturers may also be linked to transhipment activities by Chinese peers," the firm said. Meanwhile, HLIB expects average selling prices (ASPs) to stay subdued due to raw material prices and intense regional competition, as ASPs peaked in December 2024. On global supply, HLIB projects an additional five to eight billion pieces per annum in capacity from Vietnam and 0.5 billion from Indonesia by the end of 2025. "We estimated that Intco will add approximately 10 billion pieces per annum of glove production capacity from its operations in China alone in 2025," it added.
The Star
23-06-2025
- Business
- The Star
Kossan ramps up ESG drive
PETALING JAYA: Analysts view Kossan Rubber Industries Bhd 's initiatives in addressing environmental impact as a key component of the group's long-term operational strategy, with recent year-on-year improvements underscoring its commitment to sustainable manufacturing. According to Hong Leong Investment Bank (HLIB) Research, the group achieved measurable gains in emissions, water and waste management in 2024, despite broader challenges in the glove sector. These gains are said to align with the group's Kossan Sustainability Strategy and Blueprint 2035, which replaces its previous L.I.V.E. 12 framework and introduces more actionable targets to meet global environmental, social and governance (ESG) expectations. Kossan has set a target to reduce Scope 1 and 2 emissions intensity by 53.6% by 2035. HLIB Research noted that Kossan's technical rubber products division had achieved a 3.7% year-on-year reduction in emissions intensity to 2.37 carbon dioxide equivalent per kilogramme (CO2e/kg), driven by ongoing energy-saving measures. However, the group's overall emissions intensity remained flattish at 0.023 tonnes CO2e for every 1,000 pieces of gloves in 2024, due to the inclusion of fugitive emissions and the adoption of updated national emission factors for Scope 2 calculations. In water management, Kossan aims to cut water consumption intensity by 35% by 2035. HLIB Research kept its earnings forecasts for financial year 2025 (FY25) to FY27 and maintained its 'buy' call with an unchanged target price of RM2.30, citing the group's recovery remains on track.
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.
