Supermax expected to remain loss-making amid US cost pressures

KUALA LUMPUR: Supermax Corp Bhd is expected to remain in the red for the second quarter (Q2) of financial year 2026 (FY26), amid higher operating costs at its United States (US) operations, muted cost pass-through and a weaker dollar.

CIMB Securities Sdn Bhd said industry conditions are likely to stay challenging over the medium term amid persistent demand-supply imbalances.

"Additionally, the commissioning of new overseas glove manufacturing plants in Indonesia by Chinese manufacturers in the fourth quarter of calendar year 2025 may pose a threat to Malaysian glove exports to the US," it said in a note.

CIMB Securities revised its FY26 core net loss forecast for Supermax to RM50.3 million from RM93 million previously, reflecting lower operating cost assumptions.

It expects the group to remain loss-making, projecting core net losses of RM32.9 million in FY27 and RM16.7 million in FY28.

"Our forecasts factor in lower average selling prices, lower sales volumes and a weaker US dollar versus ringgit assumption of 4.15 from 4.40 previously for FY26 to FY28.

"Hence, our target price is lowered to 31 sen from 53 sen and we downgrade the stock to 'Reduce' from 'Hold'.

"This is owing to its higher cost structure relative to peers, driven by elevated costs at its US glove operations, as well as execution risks from the slower-than-expected ramp-up of its US operations, which could pose earnings risks," it added.

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