22-05-2025
- Business
- New Straits Times
Analyst downgrades Supermax to 'Hold', expects losses to persist through FY26
KUALA LUMPUR: Supermax Corp Bhd is expected to remain loss-making up to the end of financial year 2026 (FY26), weighed down by a challenging operating environment and continued start-up losses from its United States (US) glove plant.
CIMB Securities said the demand from US clients is likely to stay subdued in the short term for Supermax, as prior front-loading activities suggest that current inventory levels could last until the second quarter (Q2) of FY26.
Outside the US, the firm anticipates average selling price (ASPs) to remain under pressure as Chinese glove makers increase their presence in non-US markets, intensifying competitive dynamics.
"Although Supermax commenced initial production on the first half of Phase 1 (2.4 billion pieces annually) at its US facility in January , we believe the ramp-up to full commercial production could be slower than expected owing to ongoing production line validation.
"Until the full capacity of Phase 1 (4.8 billion pieces annually) is operational — likely only by the second half of FY26 — we expect US operations to remain in the red, given the lack of scale needed to achieve operating leverage," it said.
Supermax reported a core net loss of RM93.4 million for the nine months of FY25, which is below our expectations.
The wider-than-expected loss in Q3 FY25 was mainly due to weaker sales
demand and the adverse impact of the strengthening of the ringgit against the US dollar.
CIMB Securities has widened its net loss forecasts for FY25 to FY26 to reflect softer sales volumes, more competitive ASPs and a delay in the commercial ramp-up of Supermax's US glove plant.
The firm now projects Supermax to remain loss-making through its FY26 forecast, with a return to profitability only expected in FY27.
As a result, CIMB Securities has lowered its target price to 80 sen from RM1.05 to reflect a more challenging operating outlook.
"Given the near-term headwinds and intensifying competitive landscape, we downgrade Supermax to 'Hold' from 'Buy'," it added.
