KOSSAN 7153 KOSSAN RUBBER INDUSTRIES BERHAD looking at Q1 loss on weak selling price, rising costs: PublicInvest
However, Kossan’s Technical Rubber Product segment should provide some cushioning effect though contribution is unlikely to grow, but to remain stable in the near term. NSTP/OWEE AH CHUN.
KUALA LUMPUR: Kossan Rubber Industries Bhd could be loss making in the first quarter of financial year 2023 (Q1FY23) as utilisation rate remains low at 50 per cent.
According to Public Investment Bank Bhd (PublicInvest), Kossan's earnings were expected to narrow in FY23 due to dampening average selling prices (ASPs) and escalating costs.
"As Chinese nitrile producers slashed prices to as low as US$13.50 per 1,000 pieces in November last year, ASPs are expected to remain under pressure in the coming quarters.
"Meanwhile, the average natural gas price has increased to RM64 per one million British thermal unit (MMBtu) in January 2023 from RM55 per MMBtu, while electricity cost increased by over 30 per cent. In addition, labour cost remains elevated due to supply shortage," PublicInvest said.
Although latex prices had eased, the firm said it was not sufficient to offset the impact of rising energy and labour costs.
However, Kossan's Technical Rubber Product segment should provide some cushioning effect though contribution is unlikely to grow, but to remain stable in the near term.
PublicInvest added that overall market demand remained weak with consumption falling below pre-pandemic level, mainly due to stockpiling and inflationary pressure.
"Therefore, we believe major customers would not have the urgency to place huge orders in the near term.
"Even though China is currently facing an outbreak due to the highly contagious Omicron variant known as XBB.1.5, a sudden surge in demand for imported gloves is not expected to occur as China has sufficient capacity to meet the potential increase in consumption," it said.
PublicInvest said Kossan was taking steps to reduce cost as well as conserve cash.
Despite its strong net cash position of RM1.9 billion, Kossan has placed its near-term expansion plan on hold amid oversupply issues.
"The number of its total workforce has also been cut from 7,000 to 5,000. We believe staff strength will continue to fall as Kossan adopts greater digitalisation in its production process."
PublicInvest trimmed its FY23-25 earnings forecast by 39-40 per cent to reflect lower ASPs and higher operating cost.
It also downgraded its call on Kossan to "Underperform" with a lower target price of 75 sen from RM1.23 previously.
https://www.nst.com.my/business/2023/01/871307/kossan-looking-q1-loss-weak-selling-price-rising-costs-publicinvest
Singapore Investment
-
-
Thai Beverage – In Line As Margins Improve31 minutes ago
-
Beware Of Scams7 hours ago
-
-
-
-
-
-
-
-
Consolidation15 hours ago
-
-
-
-
-
-
-
Fed Delays Rate Cuts to September23 hours ago
-
-
-
Buying a home for face1 day ago
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Finance Investment Movement 443 days ago
-
-
-
-
-
Going REITs Shopping Again4 days ago
-
-
Weekly Markets Outlook4 days ago
-
Market indeed coming down5 days ago
-
Cory Diary : Dividend Q1 '245 days ago
-
-
-
-
-
-
-
-
-
-
-
Banks and Miles Report – Mar 20241 week ago
-
-
Revisiting Bitcoin1 week ago
-
-
-
-
-
-
-
-
-
-
-
Retirement Journey Update for March 20242 weeks ago
-
-
-
1Q 2024 Investment Strategy Update2 weeks ago
-
-
Portfolio Summary for March 20242 weeks ago
-
Reasonable Dividend Yield 2024Q22 weeks ago
-
-
-
Portfolio (March 30, 2024)3 weeks ago
-
-
-
QAF #77 - 2023 Annual Report3 weeks ago
-
Lentor Hills Residences3 weeks ago
-
Burnt out!3 weeks ago
-
-
-
Feb 2024 Expenditure3 weeks ago
-
-
-
Starting Our Second Property Cycle4 weeks ago
-
-
Position Update4 weeks ago
-
-
-
-
-
-
-
-
-
Feb 2024 Portfolio1 month ago
-
-
Summary of February 20241 month ago
-
The Market Is A Scam!1 month ago
-
-
-
-
-
-
-
-
Options Trading Journal Jan 20242 months ago
-
-
-
-
-
-
-
-
-
End of 2023 Review3 months ago
-
-
Year 2023 DIYQuant Portfolio Performance Report3 months ago
-
Monthly Summary of November 20234 months ago
-
3 Simple Poker Strategies for Beginners4 months ago
-
Migration of website4 months ago
-
-
Abandon REITS?4 months ago
-
-
-
-
-
-
-
-
-
August 2023 Portfolio Updates7 months ago
-
-
-
-
Hello SP Group, I'm Back!9 months ago
-
-
-
-
A New Light11 months ago
-
-
-
-
-
-
-
Demoralized1 year ago
-
2022 Thoughts, Hello 2023!1 year ago
-
Series of Defaults for Maple Finance1 year ago
-
Takeaways from “Sea Change”1 year ago
-
-
Greed is Coming Back1 year ago
-
-
-
-
-
-
-
-
-
-
-
What is Overemployment1 year ago
-
-
-
-
-
-
-
-
-
-
-
Home
KOSSAN
KOSSAN 7153 KOSSAN RUBBER INDUSTRIES BERHAD looking at Q1 loss on weak selling price, rising costs: PublicInvest