Kossan Rubber's Glove Pricing May Reach Peak in 2Q — Market Talk

The U.S.-Iran conflict may provide near-term support for average selling prices for gloves at Kossan Rubber Industries, though expected to be short-lived, CIMB Securities analyst Chun Sung Oong says in a note. Prices are seen to peak in 2Q before normalizing in 3Q, with Kossan expected to deliver exceptionally strong 2Q earnings, supported by higher selling prices and resilient demand, he notes. Earnings are likely to moderate from 3Q as glove prices ease following a sharp decline in nitrile butadiene rubber costs, he says. Despite near-term windfall earnings, share price momentum is expected to moderate as selling prices normalize amid persistent industry oversupply and intense pricing competition, he adds. CIMB maintains a hold rating on Kossan and keeps its target price at 1.26 ringgit. Shares are unchanged at 1.20 ringgit. (yingxian.wong@wsj.com)