[%Zgdl%] 
Research by Public
Neutral  – TP RM2.36

" Better Days Ahead"

We came away from a meeting with Kossan Rubbers’ (Kossan) Group MD/CEO, Tan Sri Lim Kuang Sia feeling upbeat on the medium-term outlook of the Malaysian rubber glove industry. Kossan is currently selling at a higher blended ASPs of USD18/1k pcs (previously at c.USD16-17/1k pcs in 4QFY23). As demand for gloves continue to increase due to customers replenishing their depleting inventories, we anticipate a sequential uptick in sales volume for 2HFY24. Kossan is running at a higher utilisation rate of 60% (4QFY23: 50%) based on a 24.5bn pcs/annual installed capacity. Raw material prices, i.e. nitrile butadiene is expected to normalise in 2HFY24 which we believe this should lead to a higher margin in the gloves segment going forward. Kossan remains the most resilient among its peers with a 33% net cash-to-market cap. While we foresee Kossan to report higher earnings, we believe this positive outlook is mostly reflected in its current valuation. Therefore, we maintain our Neutral rating on Kossan, with unchanged TP of RM2.36 based on 1.5x (near +1SD 1-year historical mean) CY25F BVPS.

Analyst:
Thye May Ting
 [%OGYG%]

$KLSE-KOSSAN 
Research by Public
Neutral  – TP RM2.36

" Better Days Ahead"

We came away from a meeting with Kossan Rubbers’ (Kossan) Group MD/CEO, Tan Sri Lim Kuang Sia feeling upbeat on the medium-term outlook of the Malaysian rubber glove industry. Kossan is currently selling at a higher blended ASPs of USD18/1k pcs (previously at c.USD16-17/1k pcs in 4QFY23). As demand for gloves continue to increase due to customers replenishing their depleting inventories, we anticipate a sequential uptick in sales volume for 2HFY24. Kossan is running at a higher utilisation rate of 60% (4QFY23: 50%) based on a 24.5bn pcs/annual installed capacity. Raw material prices, i.e. nitrile butadiene is expected to normalise in 2HFY24 which we believe this should lead to a higher margin in the gloves segment going forward. Kossan remains the most resilient among its peers with a 33% net cash-to-market cap. While we foresee Kossan to report higher earnings, we believe this positive outlook is mostly reflected in its current valuation. Therefore, we maintain our Neutral rating on Kossan, with unchanged TP of RM2.36 based on 1.5x (near +1SD 1-year historical mean) CY25F BVPS.

Analyst:
Thye May Ting
 thye.mayting@publicinvestbank.com.my

$KOSSAN / 7153 (KOSSAN RUBBER INDUSTRIES BERHAD)