Friday, May 25, 2018

FW: AmBank Research - Kossan Rubber: On the cusp of burgeoning capacity HOLD, 25 May 2018




Kossan Rubber: On the cusp of burgeoning capacity                                        HOLD


Kossan Rubber is on the cusp of burgeoning capacity after a year in the lull. We await its earnings delivery for a rerating to existing valuations, which we think is fair at this juncture. We maintain our HOLD recommendation with a DCF-derived FV of RM7.16/share (WACC: 6.5%, terminal growth: 2.5%). It implies a P/E of 18x CY19F.


Kossan registered a 1Q18 profit of RM45.1mil (QoQ: -1.7%) against a revenue base of RM484.2mil (QoQ: 1.3%). It came in line with consensus forecasts, at 20% of estimates. We are positive over Kossan’s ambitious expansion plans. However, we await the execution and delivery of its plants coming to fruition. Teething issues undermined Kossan in the past, with Plant 16 being delayed for a year. Key risks include a sharp appreciation in cost or the USD and an acceleration in capacity additions.



Others :

Kian Joo Can: A soft patch in 1QFY18                                                                       BUY

Pecca Group: Minor slip on the way up                                                                  BUY

Cocoaland Holdings: Slow start to the year                                                           HOLD

Genting Bhd: Resorts World Las Vegas progressing smoothly                      HOLD

Gent Malaysia: Surge in volume of casino business in Malaysia                   HOLD

Hock Seng Lee: 1QFY18 net profit grows 24% YoY                                              HOLD

Media Prima: Actualising cost savings                                                                     HOLD

Velesto Energy: No relief from weak rig charter rates with new name     HOLD

WCT Holdings: Lacking excitement                                                                           HOLD




Malaysia: Debt and Market Volatility   




Local Bourse: FBM KLCI’s 2018 gains erased

UMW Holdings: To keep options open on MBM Resources deal

Hengyuan: Sees better margins in 2Q as oil price rises

Maybank: Down on concerns over exposure to Hyflux





The information and opinions in this report are prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.






















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