For QE31/3/2019, Kossan's net profit declined 1% q-o-q but rose 30% to RM59 million while revenue dropped 5% q-o-q but rose 16% y-o-y to RM561 million.
Group’s revenue dropped 5% q-o-q to RM561 million while profit before tax (PBT) rose 5% q-o-q to RM75.08 million. The higher PBT was attributable to the improved earnings of the Gloves division. The Gloves division recorded a 4.3%-decline in revenue q-o-q to RM497 million but its PBT rose 8.7% to RM68 million due to continued strong demand for the Group’s glove products, with higher volume sold (+4.68%) as compared with 4Q18.
The TRPs division recorded a 7%-decline in revenue to RM47 million, while PBT decreased 19% to RM7 million mainly due to lower deliveries and increase in raw material prices (SMR10 +8.16%). The Cleanroom division recorded lower revenue and lower PBT of RM17 million and RM0.6 million respectively in 1Q19, as compared with RM19 million and RM1.1 million in 4Q18.
Table: Kossan's last 8 quarterly results
Graph: Kossan's last 51 quarterly results
Kossan's financial position as at 31/3/2019 is deemed healthy with current ratio at 1.7 times while gearing ratio was at 0.6 time.
Kossan (closed at RM3.82 last Friday) is now trading at a PE of 22.6 times (based on last 4 quarters' EPS of 16.9 sen). At this PER, Kossan is deemed fairly valued.
Kossan is in a long-term uptrend line, SS with support at RM3.65. In addition, it is trading very close to its 40-month SMA line (about equivalent to the 200-day SMA line). Its immediate resistance is the psychological RM4.00 mark.
Chart: Kossan's monthly chart as at May 24, 2019 (Source: Malaysiastock.biz)
Based on good financial performance and financial position, fair valuation & positive technical outlook, Kossan is a good stock for long-term investment.
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