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Results Note – Kossan (ADD, maintain) - Spot On!




Affin Hwang Investment Bank Bhd


25 Feb 2013





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FY12 core net profit surged by +14% yoy to RM104.5m Kossan’s (KRI) FY12 revenue grew by a commendable +13% to RM1,236m, mainly driven by: 1) a healthy 7-9% yoy growth in volume sales, particularly in its higher margin technical rubber products (+8.9% yoy growth in revenue) and, 2) an improved product mix, contributed mainly from its special purpose gloves. Taken together with the: 1) sharp fall in latex price (-24.5% yoy), (FY12’s average latex price: RM6.62/kg vs FY11’s average latex price: RM8.84/kg), and 2), better operating efficiencies boosted by plant automations, the company’s EBIT margin, edged up by +0.6%-points, to 11.9%. All in, net profit grew by +14.3% to RM104.5m. Results were within both our and street’s expectation, accounting for 100% and 101% of both our and consensus full year projections

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