RHB Research has maintained a “Buy’ recommendation Kossan Rubber Bhd with an unchanged TP of MYR2.05, 21% upside and c.3% yield as valuations remain undemanding at the current juncture.
It said that its TP implies 16x FY23 P/E, in line with its pre-pandemic 10-year mean. Additionally, we ascribed an 8% ESG discount to our intrinsic value to derive our TP as Kossan’s ESG score stood below our country median.
The research house said that the construction of its Meru plant is ongoing, but Kossan is now scaling back its commencement date, similarly to the capacity deferments across the industry in light of the current supply-demand dynamics.
“While no official guidance was given, we now expect Phase 1 (additional 2bn pcs) and Phase 2 (additional 3bn pcs) of its Meru plant to complete in 2H22 and 1H23 respectively,” it said
