PETALING JAYA: Karex Bhd
is expected to see an improvement in earnings and margins in the financial year ending June 30, 2027 (FY27), supported by higher selling prices, expanding synthetic condom capacity and a gradual recovery in tender demand, says AmInvestment Bank.
The research house remains constructive on the condom maker’s outlook, noting that most customer price increases took effect from July 2026, while rubber costs are largely hedged until the end of FY27.
“Synthetic capacity should rise from nine lines currently to 19 by June 2027.
“With tender demand showing tentative signs of recovery and manufacturing costs falling, we see FY27 as a year of earnings and margin recovery.
“We maintain ‘buy’ and our RM0.60 target price with earnings estimates unchanged,” AmInvestment said in a note to clients.
It said its target price was based on a 23 times target price-to-earnings applied to average FY28/FY29 earnings per share of 2.64 sen. It believes the multiple remains justified by Karex’s improving earnings trajectory, supported by pricing recovery, higher-margin synthetic condoms and a gradual tender recovery.
“The group has implemented significant price adjustments across most customers, with the bulk taking effect from July 2026.
“While the quantum and timing can vary, it was previously reported that prices were broadly raised by 20% to 30%. With rubber largely hedged through end-FY27 and other raw material prices stable, the pricing benefits should increasingly flow through earnings,” it added.
