KUALA LUMPUR (Aug 25): Kossan Rubber Industries Bhd has joined its glovemaker peers to post its highest ever quarterly profit of RM131.06 million for the second quarter ended June 30 (2QFY20).

To cheer up its shareholders further, the group announced a one-for-one bonus issue entailing the issuance of 1.28 billion shares, which will enlarge its issued share capital to 2.56 billion shares.

The glove maker’s net profit soared 134.52% from RM55.88 million a year ago on higher sales and average selling prices (ASPs), triggered by demand spike due to Covid-19.

The higher sales volume and selling prices helped improve net margin by 8% on-year. Its earnings per share more than doubled to 10.25 sen, from 4.37 in 2QFY19, Kossan's bourse filing showed.

Quarterly revenue, meanwhile, rose 27.5% to RM701.68 million, from RM550.53 million a year ago.

The exponential growth is expected to continue, according to Kossan. It commented that the group’s performance will further improve for the rest of the year.

“With our selling prices for gloves quoted 45 to 60 days before delivery, the increase in prices started to be reflected in June 2020, and we will definitely see a significant quarter-on-quarter increase in ASP in 3Q20 and especially in 4Q20,” it said.

“Premised on the above and with additional capacity of around 15%-20%, management is confident of a further step-up in revenue and profit growth on a quarter-on-quarter basis in the 3QFY20 and more significantly in 4QFY20,” it added.

For the half-year ended June 30 (1HFY20), Kossan's net profit expanded almost 71% year-on-year to RM195.86 million, from RM114.61 million. Half-year revenue rose 18% to RM1.31 billion, from RM1.11 billion in the previous corresponding period.

Its half-year net profit is only 30% of the full year consensus estimate of RM661.9 million, according to Bloomberg.

Kossan pointed out that while its glove and cleanroom segments outperformed, its technical rubber product (TRP) segment for infrastructure and automotive industry was hit, as expected, due to operations disruption during the movement control order and the softened demand from its customers amid the pandemic.

“However, the TRP division only constitutes less than 4% of revenue currently. The division has since resumed full operations after the government began easing the lockdown measures and the group expects this division will remain profitable,” it said.

Kossan’s share price shed 8.16% or RM1.30 to close at RM14.64 today, valuing the group at RM18.72 billion. However, year-to-date, the counter has risen by 252%.

Edited by Kathy Fong