PETALING JAYA: Karex Bhd
’s financial performance recovery hinges on the commercial success of premium nitrile condoms and the successful implementation of average selling price (ASP) hikes ranging from 6% to 10%.
RHB Research noted Karex’s shift toward premium offerings provides a pathway for significant earnings recovery in its financial year 2027 (FY27) and FY28.
This factor appears to keep analysts with a constructive view on the company despite it posting a net loss of RM6.4mil in its latest third quarter ended March 31, 2026 (3Q26), mainly due to weaker-than-expected margins amid sustained unfavourable foreign-exchange (forex) movements.
That took nine-month net loss to RM3.5mil while revenue slipped by 4.3% year-on-year to RM361.3mil, mainly due to lower sales of condoms and personal lubricants to the tender market, despite higher synthetic condom sales following the successful launch of the venture.
Despite the loss, RHB Research upgraded Karex to a “buy” from “neutral”, citing a favourable risk-reward profile despite the company experiencing its softest quarter since listing.
“We turn positive as the current risk-reward profile becomes favourable.
“However, our upgraded view hinges heavily on the commercial success of its nitrile product and ability to successfully pass through subsequent ASP hikes to defend against elevated input costs,” the research house stated in a report on the company, which currently trades at a 20% discount to its peers.
RHB Research expects Karex to post a pre-tax loss of RM5.5mil for 4Q26 despite the gradual rollout of ASP hikes, stable forex environment and gradual US tariff refund of US$2mil that would help offset near-term margin risks from rising input costs.
Its target price (TP) for Karex was lowered to 56 sen a share.
AmInvestment Bank (AmInvest) Research also maintained its “buy” call on Karex at a lower TP of 60 sen a share (from 85 sen) on expectations its synthetic condom business could be a game changer for the group.
It, however, cut earnings for Karex by 32%-129%, mainly due to weaker tender sales and higher material costs pressures.
“Karex is weathering a storm, as soft tender markets and repeated cost hikes continue to pressure margins.
“While we do not view this as structural, given the essential nature of condoms, earnings could remain weak in the near term.
“Its synthetic condom story remains intact, but timelines have been pushed back as product reönements continue. As such, FY27 is now more likely to be the breakout year,” AmInvest Research concluded.
Kenanga Research, meanwhile, remains more cautious about Karex’s future and cut its FY26 and FY27 net profit forecasts for the company to RM700,000 and RM22.3mil respectively after imputing the weaker 3Q26 performance, and lower FY27 gross profit margin assumptions.
Correspondingly, it lowered its TP for the company to 53 sen a share based on an unchanged FY27 price earnings multiple of 25 times while maintaining its “market perform” call on the stock.
“In our view, earnings recovery is likely to remain gradual despite continued support from the commercial segment, particularly synthetic condoms.
“The group continues to operate in a challenging environment, with unfavourable forex movements, lower US humanitarian aid budgets weighing on tender market demand, and geopolitical-driven supply chain disruptions expected to pressure earnings in the near term,” it noted in a report.
It added Karex’s earnings visibility remains mixed pending clearer signs of margin stabilisation.
