KUALA LUMPUR (Dec 1): Supermax Corporation Bhd (KL:SUPERMX) fell to its lowest in more than seven years as investors reacted to another quarter of net losses.
Analysts, meanwhile, are mostly cautious over the troubles in the glove manufacturing industry as well as persistent losses at Supermax even as its rivals have begun posting small profits in their recently ended quarter.
For CIMB Securities, which downgraded the stock to ‘reduce’ from ‘hold’ previously, Supermax’s decision to set up a plant in the US to get close to American clients would mean a higher cost structure compared to its peers.
There are also “execution risks given the slower-than-expected ramp-up of its US operations, which could pose earnings risks”, the research house flagged.
On Monday, shares of Supermax declined as much as 2.5 sen or 7% to 34.5 sen, a level last seen in April 2018. The stock closed at 35.5 sen, still down 1.5 sen or 4.05%, after some 13.3 million shares changed hands. Based on the last price, the company has a market capitalisation of RM1.16 billion.
There are now three ‘hold’, one ‘sell’ and one ‘buy’ calls on the stock with an average target price of 36 sen. CIMB Securities’ target price is 31 sen, the lowest among the analysts covering Supermax.
Supermax has lost more than two-thirds of its value so far this year, with the unbroken streak of quarterly losses going back to 2023 when the company posted a small net profit.
The industry is grappling with a massive supply glut as rivals from China set up shop and ramp up their productions in other Southeast Asian countries to dodge US tariffs. A deluge of Chinese-made gloves in non-American markets has also added to the pressure faced by Malaysian manufacturers.
“The oversupply situation is likely to persist for at least the next three years” and pressure average selling prices, said TA Securities, which maintained its ‘hold’ call on the stock.