KUALA LUMPUR: Kossan Rubber Industries Bhd's shares on Bursa Malaysia rose in early trade after the company announced an interim and special dividend, despite weaker results for the third quarter ended Sept 30, 2024 (3Q 2024).

At 10.51 am, Kossan shares rose by 8.0 sen to RM2.36, with 5.40 million shares traded.

The glovemaker reported a net profit of RM29.44 million for 3Q 2024 on Nov 15, down from RM40.97 million in the same period last year.

However, its revenue increased to RM507.39 million from RM403.48 million previously, driven by positive performance across all divisions.

The company declared an interim single-tier tax-exempt dividend of 2.0 sen per ordinary share, along with a special single-tier tax-exempt dividend of 6.0 sen per ordinary share, for the financial year ending Dec 31, 2024.

In a note, MIDF Amanah Investment Bank Bhd said Kossan's 3Q 2024 financial performance was at the lower end of expectations, accounting for 70.4 per cent of its full-year earnings estimates for FY2024.

"We retain our earnings estimates for FY2024 and only adjust our dividend estimates higher to account for the special dividend," it said.

"Meanwhile, our earnings estimates for FY2025 and FY2026 have been revised upwards by 13.3 per cent and 7.7 per cent, respectively, due to expectations of higher demand for its products, primarily from the glove division," it added.

MIDF Research has maintained a 'neutral' call with a revised target price (TP) of RM2.14 a share.

Public Investment Bank Bhd remains positive on Kossan, citing sequential improvements in sales volume as customers continue to replenish inventories.

"Additionally, the announcement of higher tariffs on glove imports from China by the United States (US) Trade Representative, effective January 2025, could further benefit Malaysian manufacturers, helping them regain market share in the US," it said.

The research house has maintained earnings forecasts for FY2024-2026 and reiterated an 'outperform' call on Kossan, with a higher TP of RM2.65 a share.

Hong Leong Investment Bank Bhd believes Kossan's glove and clean-room segments can achieve 8-10 per cent quarter-on-quarter sales volume growth in the fourth quarter of 2024.

"We maintain our FY2025-2026 forecasts, which we consider reasonable under the current outlook.

"We continue to rate Kossan as a 'buy' with an unchanged TP of RM3.00 a share," it said.

Maybank Investment Bank Bhd expects stronger earnings in 4Q 2024 due to increased sales volume, better average selling prices, and a stabilising USD/MYR rate.

"We lower our FY2024/2025/2026 earnings estimates by 4-9 per cent. Our new TP is RM2.49 a share. We continue to favour Kossan's strong balance sheet and more diversified income stream," it said.

CIMB Investment Bank Bhd, noting that 3Q 2024 results were below expectations, lowered its FY2024, FY2025 and FY2026 earnings per share forecasts by 13.5 per cent, 1.5 per cent and 0.2 per cent, respectively, to account for higher input costs and the impact of a stronger ringgit in FY2025.

"Our USD/MYR estimates for FY2025-2026 remain unchanged at RM4.50. However, we have raised our TP to RM2.50 a share," it said.

CIMB Securities, despite an improved operating outlook for Malaysian glove makers, including Kossan, has maintained a 'hold' call, citing the lack of investor updates and operational data from the company over the past 12 months.

"However, we believe Kossan's strong net cash position (RM1.8 billion as of end-3Q 2024), the highest among glove stocks under our coverage, will support current valuations," it added.

TAGS: Kossan, Rubber, Bursa Malaysia, stockwatch, 3Q2024