KUALA LUMPUR (Feb 21): Shares in Supermax Corp Bhd fell 4.89% in the mid-morning on Wednesday, following the glove maker's fifth consecutive quarter of net loss.
At 9.45am, the counter had fallen 4.5 sen to 87.5 sen, with 8.97 million shares traded.
Supermax reported a net loss of RM44.36 million for the second quarter ended Dec 31, 2023 (2QFY2024), from RM108.07 million a year earlier, as quarterly revenue shrank by 16.7% to RM145.55 million from RM174.79 million.
It attributed this to continued weak demand after the Covid-19 pandemic, and low selling prices due to stiff competition, particularly from Chinese manufacturers capitalising on low utility costs.
For the cumulative six months ended Dec 31, 2023 (1HFY2024), the group's net loss dropped 54.7% to RM46.41 million from RM102.36 million for 1HFY2023, while revenue dropped 23.5% to RM323.52 million from RM422.75 million.
It expects the rubber glove market to remain lacklustre, with an unfavorable outlook for 2024, due to ongoing demand-supply dynamics following the pandemic.
Nevertheless, RHB Investment Bank maintained its 'buy' rating for Supermax, but lowered its target price to RM1.03 from RM1.06, saying the company's 2QFY2024 numbers disappointed after registering a core net loss of RM15 million, amid one-off logistical constraints caused by the Red Sea crisis and subdued average selling prices (ASPs).
“We still retain our bullish stance, underpinned by expected gradual improvement in market dynamics by the second half of calendar year 2024, which should propel Supermax to profitability — not forgetting a sequential pickup in sales volumes, as the US' withhold release order against Supermax was lifted on Sept 18.
“We now expect ASPs to trend higher in 3QFY2024, in view of elevated raw material prices. All in, we retain our view that glove demand will continue picking up in the coming quarters, as client inventory levels deplete. This is on top of such inventories stockpiled since 2020 approach their expiry dates, as the typical shelf life for gloves is three to five years,” RHB said.