Author: PublicInvest | Publish date: Thu, 16 Jun 2016, 10:40 AM
Kossan has entered into a Memorandum of Agreement (MoA) with Shanghai Tongji University Tong Tech Metro Vibration Control Co. Ltd. (TMVC) through its 70%-owned subsidiary, Doshin Rubber Products (M) Sdn. Bhd. Both parties are partnering to design and manufacture anti-vibration systems for railways, buildings and bridges along railway lines in China. We believe this partnership augurs well for its technical rubber product (TRP) segment going forward. We reaffirm our Outperform call on Kossan with unchanged TP of RM8.50.
Details of MoA. Doshin will be responsible for manufacturing the floating flab, base plate vibration isolation technology and rubber pad according to the designs supplied by TMVC. It will also undertake joint product development, design, trial production and manufacturing of the products, as well as conduct technical seminars. In addition to the above, TMVC will also promote other products manufactured by Doshin for China’s projects. Upon Doshin’s request, TMVC will provide technical support to any projects which outside China.
Reiterating Outperform call. We are positive on this move given the better outlook for its technical rubber product (TRP) segment going forward. Our earnings estimates remain unchanged at this juncture. We continue to like Kossan, owing to i) its good track record in securing orders ahead, ii) continuous enhancement initiatives, resulting in stable margins, iii) enhancing its product mix through product innovation. We reaffirm our Outperform call on Kossan with unchanged TP of RM8.50.
Source: PublicInvest Research - 16 Jun 2016
Details of MoA. Doshin will be responsible for manufacturing the floating flab, base plate vibration isolation technology and rubber pad according to the designs supplied by TMVC. It will also undertake joint product development, design, trial production and manufacturing of the products, as well as conduct technical seminars. In addition to the above, TMVC will also promote other products manufactured by Doshin for China’s projects. Upon Doshin’s request, TMVC will provide technical support to any projects which outside China.
Reiterating Outperform call. We are positive on this move given the better outlook for its technical rubber product (TRP) segment going forward. Our earnings estimates remain unchanged at this juncture. We continue to like Kossan, owing to i) its good track record in securing orders ahead, ii) continuous enhancement initiatives, resulting in stable margins, iii) enhancing its product mix through product innovation. We reaffirm our Outperform call on Kossan with unchanged TP of RM8.50.
Source: PublicInvest Research - 16 Jun 2016
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