PETALING JAYA: Analysts have maintained their “buy” calls on glove maker Kossan Rubber Industries Bhd
after its recent earnings came in above some of their expectations.
MBSB Research said Kossan’s first six months of its financial year ending Dec 31, 2026 (FY26) earnings came in above its expectations at 78% and of consensus at 75%.
It has revised its target price for Kossan to RM1.79 from the previous RM1.37.
“Considering that Kossan’s six-month FY26 results are above our expectations, we revise our earnings forecast for FY26 to FY28 upward by 53%, 26% and 20%, respectively,” the research firm said.
The company’s net profit doubled in the second quarter ended June 30, 2026, even as the gloves division reported a 53.43% year-on-year (y-o-y) surge in revenue on higher average selling prices (ASPs) and sales volumes.
For the six-month period to June 30, Kossan recorded a net profit of RM103.99mil as compared to RM66.81mil in the first half of FY25 (1H25).
Revenue increased to RM1.04bil from RM869.54mil in the same period a year earlier.
MBSB Research said the glove industry is showing signs of a steady recovery, driven by normalised client inventory levels and sustained demand across healthcare, industrial, and specialised sectors.
However, the market remains vigilant on the persistent global overcapacity and volatile input costs (energy and raw materials), it warned.
To navigate these headwinds, Kossan is expected to continue prioritising internal cost controls, automation, digitalisation and proactive foreign-exchange risk management to safeguard margins against pricing pressures and foreign currency swings, the research house added.
Meanwhile, TA Research said Kossan’s 1H26 net profit of RM104mil came in within its expectations at 58.9% of its full-year forecast, but above consensus estimates.
It said moving into 2H26, it expects the ASP growth to moderate in the third quarter of FY26 (3Q26) and normalise by 4Q26.
“Note that the ASP in 2Q26 was relatively high, driven by cost-push factors such as rising raw materials costs, resulting from the war in the Middle East. Meanwhile, we expect utilisation rates to remain high, at above 80% levels,” it said.
TA Research said Kossan will continue to enhance its operational efficiency through automation, cost optimisation and digitalisation initiatives.
The older plants are being upgraded progressively with a higher degree of automation to improve margins and reduce labour requirement, TA Research said, adding that it has maintained a “buy” recommendation on Kossan with a target price of RM1.25 per share based on 0.8 times FY27 price to book.
TA Research said notably, the group’s total net cash and investments stood at RM1.6bil or 63 sen per share as at June.
