PETALING JAYA: Karex Bhd
anticipates stronger earnings from its synthetic nitrile condom segment beginning from the second quarter of its financial year ending June 30, 2026 (FY26), driven by increased capacity, product innovation, and improving margins, analysts say.
BIMB Research views this as a key catalyst for a medium-term earnings recovery, though it remains cautious about near-term prospects for Karex due to foreign-exchange volatility and rising labour costs.
Given the stock’s current valuation near the lower end of its fair-value range and limited immediate catalysts, the research house has maintained a “neutral” call, placing Karex on its watchlist while closely monitoring its execution.
At 78 sen a share, Karex trades at 1.8 times price to book value, which is a discount compared with global peers such as Reckitt Benckiser Group Plc at 4.9 times and Church & Dwight Co Inc at 6.2 times.
On the positive side, Karex highlighted the superior cost efficiency of nitrile supports gross profit margins exceeding 50%.
To capitalise on rising global demand for non-latex alternatives, Karex plans to expand its production capacity from six lines currently to 16 lines by FY26.
Despite ongoing tariffs in the United States, Karex remains competitive as Thailand and Malaysia face a 19% tariffs, which is significantly lower than the 30% and 50% imposed on competitors from China and India, respectively.
