Thursday 28 Mar 2024
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KUALA LUMPUR (Oct 25): Shares in Supermax Corp Bhd slipped below the RM2 mark for the first time since May 2020 as investors weighed in the recent US import ban on its glove products.

The counter fell as much as 11 sen or 5.42% to RM1.92 in early trade on Monday (Oct 25).

At 10.35am, it had pared some losses at RM1.95, still down eight sen or 3.94%.

The last time the stock slipped below RM2 was May 15, 2020, when the stock closed at RM1.99.

Last Thursday, the US Customs and Border Protection said its officers at all US ports of entry will detain disposable gloves produced by Supermax’s wholly-owned subsidiaries Maxter Glove Manufacturing Sdn Bhd, Maxwell Glove Manufacturing Bhd and Supermax Glove Manufacturing.

In a note last Friday, KAF Research analyst Nabil Zainoodin maintained his "sell" call on Supermax with an unchanged target price of RM1.

“Whilst the US historically contributes around 20% of the group’s turnover, the impact on earnings will depend on Supermax’s ability to reroute sales to other markets and how long it takes to resolve the issue,” he said.

Nonetheless, he expects a significant operating margin reversal in the forthcoming quarters as average selling prices contract faster than expected.

“This is further compounded by its expanded capacity, resulting in higher fixed costs,” he added.

Currently, Supermax has five glove manufacturing plants under construction and these new plants will add 22.3 billion pieces of gloves per year, bringing the group’s total capacity to 48.4 billion gloves when they are fully commissioned.

“We have already imputed a slower capacity addition in anticipation of a lower sales volume and as such, we maintain our earnings forecasts at this juncture pending further clarification from the management,” said Nabil.

Edited BySurin Murugiah
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