KOSSAN (7153) : Affin Hwang Research maintains Buy on Kossan
KUALA LUMPUR: Affin Hwang Research has maintained its Buy on Kossan with a target price of RM5.95 pegged to an unchanged target price to earnings of 18 times, a 38% premium to the sector’s average of 13 times.
"We believe the premium is justified, as we expect strong earnings growth of 36% on-year in FY15 and 20% on-year in FY16, backed by aggressive capacity expansion plans, margin improvement through automation, continued growth in the TRP division and a continued stable operating environment, with lower raw material prices and a favorable USD vs RM.
"Kossan remains our sector top pick," it said in a note on Monday.
The research house said it remained positive on Kossan's outlook and has lifted FY16 net earnings estimate by 8% to reflect expected production-capacity increases and improving production efficiency.
"However, we trim our FY14E net earnings by 11% on delays in the commissioning of its new plants," it noted.
Affin Hwang said it is trimming Kossan's FY14 net profit estimate by 11% to RM158mil from RM178mil after taking into account the six-month delay in the commissioning of its new plants.
To recap, the group earlier had planned to commission three new plants in 2014. So far, only one of the plants has been fully commissioned this year, in August.
http://www.thestar.com.my
KUALA LUMPUR: Affin Hwang Research has maintained its Buy on Kossan with a target price of RM5.95 pegged to an unchanged target price to earnings of 18 times, a 38% premium to the sector’s average of 13 times.
"We believe the premium is justified, as we expect strong earnings growth of 36% on-year in FY15 and 20% on-year in FY16, backed by aggressive capacity expansion plans, margin improvement through automation, continued growth in the TRP division and a continued stable operating environment, with lower raw material prices and a favorable USD vs RM.
"Kossan remains our sector top pick," it said in a note on Monday.
The research house said it remained positive on Kossan's outlook and has lifted FY16 net earnings estimate by 8% to reflect expected production-capacity increases and improving production efficiency.
"However, we trim our FY14E net earnings by 11% on delays in the commissioning of its new plants," it noted.
Affin Hwang said it is trimming Kossan's FY14 net profit estimate by 11% to RM158mil from RM178mil after taking into account the six-month delay in the commissioning of its new plants.
To recap, the group earlier had planned to commission three new plants in 2014. So far, only one of the plants has been fully commissioned this year, in August.
http://www.thestar.com.my
