KENANGA MAINTAINS SUPERMAX FY2024 NET PROFIT, CUTS FY2025 FORECAST BY 54 PCT

KUALA LUMPUR, May 10 (Bernama) -- Kenanga Investment Bank Bhd has maintained Supermax Corp Bhd’s financial year 2024 (FY2024F) net profit forecast but cut its FY2025 forecast by 54 per cent due to losses from its purchase of Supermax Healthcare Canada Inc (SHCI).

In a note, the investment bank said Supermax has bought the remaining 33 per cent equity interest in the loss-making Canadian unit for RM18.9 million cash; it already owned a 67 per cent stake. 

“The RM18.9 million capital outlay will only put a minor dent on Supermax’s RM1.5 billion net cash as at Dec 31, 2023.

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“However, based on SHCI’s RM53 million net loss in June 2023, the additional 33 per cent equity interest will add a RM17 million loss to its bottom line on a full-year basis,” it said today.

The research house also expects the group to face a challenging operating environment in subsequent quarters due to massive oversupply.

“The group expects the current challenging operating environment to persist, with a likelihood of a meaningful recovery only sometime in 2025,” it said.

Based on estimates, Kenanga said the demand-supply situation will only start to head towards equilibrium in 2026 − without new capacity coming onstream − and with a 15 per cent a year increase in global glove demand underpinned by rising hygiene awareness, it said.

It noted that rubber glove demand will rise by 30 per cent to 390 billion pieces in 2024 due to 2023’s low base effect and resume its 15 per cent organic growth thereafter.

“This will result in an excess capacity of 212 billion pieces in 2024. Persistent overcapacity means low prices and depressed plant utilisation will continue to plague the industry in 2024,” it noted. 

The Malaysian Rubber Glove Manufacturers Association projects a 12−15 per cent growth in global demand for rubber gloves annually from 2023, following an estimated 25 per cent contraction to 300 billion pieces last year. 

Meanwhile, Kenanga has maintained its target price of 84 sen and ‘market perform’ call on the group.

As of 12.01 pm, Supermax’s share price rose by 15 sen to 88 sen per share, with 5.14 million shares traded.

-- BERNAMA