Kossan's net profit dropped by 22% q-o-q or 24% y-o-y to RM23.0 million while the turnover was little changed at RM256 million (increased by 1.4% q-o-q or dropped by 2.4% y-o-y). The drop in the net profit was attributable to higher cost of rubber latexx.
Table: Kossan's last 8 quarterly results
Chart 1: Kossan's last 19 quarterly results
Valuation
Kossan (closed at RM3.23 yesterday) is now trading at a PE of 9.3 times (based on last 4 quarters' EPS of 34.68 sen). Based on this PE multiple, Kossan is deemed fairly valued.
Technical Outlook
Kossan is in a long-term uptrend line with support at RM3.00-3.05. Below that, Kossan would also have good support from the horizontal line RM2.90. Its immedaite resistance is the horizontal line RM3.40.
Chart 2: Kossan's weekly chart as at May 20, 2011 (Source: Quickcharts)
Conclusion
Despite the continued slide in its bottom-line, Kossan is still rated a HOLD due to its fair valuation & mildly positive technical outlook.
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