PETALING JAYA: The financial year 2027 (FY27) continues to be viewed as a structural turning point for Karex Bhd
, underpinned by a low base and a back-end-loaded scale-up in its nitrile condom business.
CIMB Research forecasts Karex’s core net profit for FY27 to recover to RM19.7mil (plus 452% year-on-year or y-o-y) from a low base.
This growth is driven by the recent 1.3% quarter-to-date weakening of the ringgit against the US dollar, which provides a margin tailwind for the exporter.
Performance will also be supported by gradual average selling price (ASP) hikes, stronger demand for its patented nitrile condoms, and improved operating leverage as sales volumes recover.
“We expect the benefits from recent ASP adjustments to become more meaningful from the first quarter of FY27 (1Q27) onwards as customers progressively accept Karex’s selling price increases.
“We also expect further traction for its patented nitrile condoms, supported by additional regulatory approvals and broader market rollouts, with nine new markets targeted in FY27, building on 21 markets as at end-FY26,” the research house said in a report yesterday.
However, CIMB Research said the ramp-up is likely to remain gradual in the first half of FY27 (1H27) as its original equipment manufacturer customer continues to destock the existing variant ahead of the launch of the new version, before more restocking activities in 2H27.
“This should be complemented by stronger demand for latex condoms amid a tighter global supply backdrop,” the research house added.
CIMB Research said Karex’s underlying operations remained soft in FY26. Both the group’s sexual wellness segment and medical segment saw contractions by 6.6% y-o-y and 20.7% y-o-y, respectively.
The research house noted that despite stronger synthetic condom sales, the group’s top line was weighed down by ringgit appreciation against the US dollar and lower tender volumes.
In tandem with weaker revenue, gross profit margin contracted 0.2 percentage points y-o-y on higher input costs, while higher operating expenses and US import tariffs compressed earnings before interest, taxes, depreciation and amortisation margin by 1.5 percentage points y-o-y to 8.7%.
Karex recorded a core net loss of RM1.2mil in 4Q26 after adjusting for net one-off gains of RM5mil, mainly comprising a RM5.6mil refund for US import tariffs incurred during the first nine months of FY26 following the reduction in the US tariff rate to 10% from 19%, effective March 2.
CIMB Research maintained a “buy” call for Karex with a target price of 70 sen.
Meanwhile, RHB Research said it continues to view FY27 as a structural turning point for Karex, underpinned by a back-end-loaded scale-up in its nitrile condoms.
The research house said there also remains room for ASP expansion in FY27, as the 5% to 15% price increases have yet to be fully reflected in 4Q26.
“The cumulative uplift should reach 20% to 30% versus ASPs in early FY25. Combined with normalising raw material costs, we expect meaningful margin expansion from FY27 onwards,” the research house said.
RHB Research kept a “buy” call for Karex with a target price of 56 sen.
The research house trimmed the FY27 to FY28 earnings by 1% each after reflecting the FY26 results.
Kenanga Research said it views FY27 as more of a margin-led earnings recovery year rather than a broad-based volume recovery, with synthetic-condom execution and the sustainability of pricing gains likely to be the key earnings swing factors.
“Management remains cautious on FY27 given continued geopolitical uncertainty, foreign-exchange volatility, elevated raw material and logistics costs, and ongoing weakness in the institutional tender market. Nevertheless, the group expects a gradual improvement in profitability, supported by the full-year impact of price increases, further scaling of the synthetic-condom business, expansion into new markets, stronger contributions from commercial customers and original brand manufacturing, and continued manufacturing optimisation.”
Kenanga Research upgraded Karex to an “outperform” call with a 11% higher target price of 59 sen based on an unchanged 25 times FY27 price-to-earnings multiple.
The research house also raised the FY27 net profit forecast by 11% to RM25mil.
