CIMB Research expects Supermax to remain loss-making through FY26 to FY27, with profitability only anticipated from FY28.
PETALING JAYA: The outlook for glove maker Supermax Corp Bhd
remains bleak after to its latest quarterly earnings release for the fourth quarter of its financial year ended June 30.
According to CIMB Research, while there might be some strategic value to the company due to its direct US operations, profitability for the group will likely be elusive until sufficient scale is achieved.
Supermax’s near-term operating conditions remain challenging and it is being constrained by continued start-up losses from its US glove plant and intensifying competition in non-US markets as Chinese producers redirect volume amid US tariffs.
The group also carries the risk of additional Chinese glove capacity being commissioned outside of China to serve US demand for gloves.
“The initial production from the first half of the first phase of the US plant with capacity of 2.4 billion pieces a year began in January , but the ramp-up to full commercial output could be slower than expected owing to still-ongoing line test runs.
“Without the full capacity of 4.8 billion pieces a year for the first phase, Supermax is unlikely to achieve operating leverage, which implies US operations will remain loss-making at least until the first half of its financial year ending June 30, 2027 (FY27) at the earliest,” CIMB Research said.
Following the group’s earnings miss for its fourth quarter of FY25, CIMB Research said it had widened its FY26 to FY27 forecast net loss to reflect softer sales volumes, more competitive average selling prices and anticipated delays in the US plant’s commercial ramp-up.
The research house expects Supermax to remain loss-making through FY26 to FY27, with profitability only anticipated from FY28.
It cut its target price to 53 sen from 80 sen, pegged to 0.4 times next year’s price to book value from 0.6 times previously, to reflect the sector’s weak operating backdrop and an ongoing dispute between Supermax’s key shareholders.
Meanwhile, Kenanga Research said there is a likelihood that the potentially lucrative US market for the group may be dampened if the current onerous tariff levels the United States has imposed on Chinese players are eased further.
This could temporarily lower any visibility on orders, prompting investors to adopt a wait-and-see approach, the research house said.
It added that Supermax’s FY25 results had missed expectations with a net loss of RM160mil, compared with the full-year net loss forecast of RM99mil and the full-year consensus net loss estimate of RM96mil.
