Kossan Rubber Industries Berhad has seen its target price revised to RM1.89 from RM2.45 following its 2QFY24 results announcement. The analysts have maintained a NEUTRAL stance on the company amidst ongoing challenges in the sector, including a slow recovery in demand and persistent supply-demand imbalance.
Analysts from Kenanga, MIDF and Maybank have downgraded their recommendations, with one analyst maintaining an UNDERPERFORM rating and adjusting the target price to RM1.56 from RM1.48. This reflects concerns over the sector's overcapacity and competitive pressures, which continue to impact Kossan's performance.
For 2QFY24, Kossan reported a core net profit of RM27.3 million, reversing a loss of RM2.8 million from the previous year. This improvement was supported by a revenue increase of 10.9% year-on-year, reaching RM429.9 million. However, the first half FY24 earnings of RM52.0 million fell short of expectations, covering only 36.1% of the full-year estimates.
Despite the current challenges, Kossan is expected to remain profitable. Analysts project a slow recovery in demand and ongoing competitive pressures, which may limit growth prospects in the near term. The company is anticipated to continue its profitability through strategic adjustments and cost efficiency measures.