Small Cap Asean Research
Consumer Cyclical | Rubber Products
16 July 2025
Supermax Corp (SUCB MK): Bleak Prospects Ahead; Maintain SELL
- Maintain SELL, DCF-derived TP drops to MYR0.54 from MYR0.64, 16% downside. We expect Supermax to remain in red for the subsequent quarter, no thanks to the impact of a weakening USD and earnings drag from its US plant. Our TP incorporates a 14% ESG discount, as SUCB’s 2.3 score is below our 3.0 country median.
- Results preview. We expect SUCB to remain in the red in 4QFY25 (Jun), due to the earnings drag from its plant in the US (given a slower-than-expected ramp-up). This, however, would be offset by easing raw material prices. We expect SUCB’s sales volume to remain subdued, as the inventory adjustment of its US customers is taking longer than anticipated. All in all, we do not expect any material ASP adjustments this year, as cost pass-throughs remain challenging, in view of the intensified competition.
- Operating costs set to escalate further. The mandatory Employees Provident Fund or EPF contribution for foreign workers will take effect in Oct 2025. We estimate that this new policy will spike up production costs by 0.8-1% (or USD0.15-0.20 per 1,000 pieces). Meanwhile, the expanded Sales and Service Tax of 5%, which is applicable to imported natural rubber latex and nitrile butadiene rubber latex, is expected to increase production costs by USD0.25-0.30 per 1,000 pieces (ie 1.3-1.5%). The confluence of factors mentioned above comes at a time when the industry is already grappling with intense competition, and glovemakers have a limited ability to pass on rising costs to customers.
- The sector’s valuation may seem attractive – it is hovering around 0.9x 2025 P/BV, or 1.2SD below the historical average of 1.2x. However, given the lack of near-term re-rating catalysts, we do not encourage investors to accumulate at this level – since the risk of an earnings disappointment in the upcoming August reporting period is high. As such, we also think that SUCB’s share price may undergo another correction. The last time the sector traded at such a level was during 1Q23, where sector earnings hit a trough during a period of consolidation.
- Earnings estimate revisions and valuation. Our earnings estimates are largely unchanged. We lift our risk premium assumptions to take into consideration the higher risk associated with cautious investor sentiment, from the risk of an earnings disappointment. Post adjustment of these assumptions, our DCF-based TP drops to MYR0.54 (0.4x FY26 P/BV, ie 2SD below its 3-year historical average). Our new TP also echoes SUCB’s historical trough valuation of 0.4x P/BV during 2022-2023. Key upside risks: Improving US-China ties, increase in its glove ASP, faster-than-expected utilisation rate, and lower-than-expected raw material prices.
Share Performance (%)
| YTD | 1m | 3m | 6m | 12m | |
|---|---|---|---|---|---|
| Absolute | (42.2) | (2.3) | (22.9) | (32.1) | (15.6) |
| Relative | (35.8) | (3.6) | (26.7) | (29.6) | (10.6) |
| 52-wk Price low/high (MYR) | 0.58-1.12 | ||||
Source: Bloomberg
Forecasts and Valuation
| Jun-23 | Jun-24 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|---|
| Total turnover (MYRm) | 821 | 646 | 897 | 1,032 | 1,114 |
| Recurring net profit (MYRm) | (113) | (229) | (98) | (24) | (5) |
| Recurring net profit growth (%) | (115.5) | 103.7 | (57.3) | (75.3) | (79.6) |
| Recurring P/E (x) | na | na | na | na | na |
| P/B (x) | 0.4 | 0.4 | 0.4 | 0.5 | 0.5 |
| P/CF (x) | na | na | 45.64 | 25.30 | 19.19 |
| Dividend Yield (%) | 7.9 | na | na | na | na |
| EV/EBITDA (x) | na | na | 933.69 | 8.88 | 7.36 |
| Return on average equity (%) | (2.9) | (3.9) | (2.2) | (0.6) | (0.1) |
| Net debt to equity (%) | net cash | net cash | net cash | net cash | net cash |
Source: Company data, RHB
Emissions And ESG
Trend analysis
SUCB’s CO2 emissions have decreased over FY21-23.
| Emissions (tCO2e) | Jun-22 | Jun-23 | Jun-24 | Jun-25 |
|---|---|---|---|---|
| Scope 1 | 44,724 | 24,298 | – | – |
| Scope 2 | 50,827 | 39,248 | – | – |
| Scope 3 | – | – | – | – |
| Total emissions | 95,551 | 63,546 | na | na |
Source: Company data, RHB
Latest ESG-Related Developments
The US Customs and Border Patrol has lifted its ban on SUCB’s glove imports into the US, after the latter’s successful remediation of forced labour practices.
ESG Unbundled
E Score: 2.3 (GOOD)
SUCB recycles waste from its raw material by-products. The group will also evaluate its supplier performance via periodic audits to ensure adherence to its purchasing and quality requirements. However, its overall environmental disclosure lacks further clarity and does not disclose future targets.
S Score: 2.7 (GOOD)
SUCB has established an independent grievance reporting channel (SUARA KAMI) that is administered by an independent party. Worker facilities at its dormitories are in accordance with Malaysia’s Employees’ Minimum Standards of Housing, Accommodations and Amenities Act 1990 (Act 446).
G Score: 2.0 (MODERATE)
50% of its board members are independent directors. 25% of its directors are women, ie still below the 30% requirement stipulated by the Malaysian Code on Corporate Governance. SUCB does provide full disclosure on its directors’ remunerations, including salaries and bonuses.
ESG Rating History
Source: RHB
Financial Exhibits
Financial summary (MYR)
| Jun-23 | Jun-24 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|---|
| Recurring EPS | (0.04) | (0.09) | (0.03) | (0.01) | (0.00) |
| DPS | 0.05 | ||||
| BVPS | 1.74 | 1.68 | 1.42 | 1.42 | 1.41 |
| Return on average equity (%) | (2.9) | (3.9) | (2.2) | (0.6) | (0.1) |
Valuation metrics
| Jun-23 | Jun-24 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|---|
| Recurring P/E (x) | na | na | na | na | na |
| P/B (x) | 0.4 | 0.4 | 0.4 | 0.5 | 0.5 |
| FCF Yield (%) | (40.8) | (45.9) | (5.5) | (3.7) | (2.5) |
| Dividend Yield (%) | 7.9 | ||||
| EV/EBITDA (x) | na | na | 933.69 | 8.88 | 7.36 |
| EV/EBIT (x) | na | na | na | na | na |
Income statement (MYRm)
| Jun-23 | Jun-24 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|---|
| Total turnover | 821 | 646 | 897 | 1,032 | 1,114 |
| Gross profit | 151 | 118 | 262 | 313 | 336 |
| EBITDA | (90) | (102) | 1 | 86 | 110 |
| Depreciation and amortisation | (85) | (68) | (107) | (109) | (112) |
| Operating profit | (175) | (171) | (107) | (23) | (2) |
| Net interest | (7) | (5) | (4) | (4) | (4) |
| Pre-tax profit | (189) | (180) | (113) | (28) | (6) |
| Taxation | 18 | (4) | 11 | 3 | 1 |
| Reported net profit | (141) | (176) | (98) | (24) | (5) |
| Recurring net profit | (113) | (229) | (98) | (24) | (5) |
Cash flow (MYRm)
| Jun-23 | Jun-24 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|---|
| Change in working capital | 166 | (143) | 31 | (11) | (9) |
| Cash flow from operations | (79) | (247) | 43 | 77 | 102 |
| Capex | (611) | (529) | (150) | (150) | (150) |
| Cash flow from investing activities | (611) | (548) | (150) | (150) | (150) |
| Dividends paid | (134) | 0 | 0 | 0 | 0 |
| Cash flow from financing activities | (287) | (21) | (9) | (4) | (4) |
| Cash at beginning of period | 3,029 | 2,146 | 1,333 | 1,217 | 1,140 |
| Net change in cash | (977) | (815) | (116) | (77) | (52) |
| Ending balance cash | 2,146 | 1,333 | 1,217 | 1,140 | 1,088 |
Balance sheet (MYRm)
| Jun-23 | Jun-24 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|---|
| Total cash and equivalents | 2,146 | 1,333 | 1,217 | 1,140 | 1,088 |
| Tangible fixed assets | 2,243 | 2,694 | 2,737 | 2,779 | 2,817 |
| Total investments | 228 | 196 | 194 | 193 | 193 |
| Total assets | 5,246 | 4,841 | 4,698 | 4,699 | 4,709 |
| Short-term debt | 86 | 108 | 103 | 103 | 103 |
| Total long-term debt | 19 | 22 | 22 | 22 | 22 |
| Total liabilities | 464 | 374 | 333 | 359 | 374 |
| Total equity | 4,782 | 4,467 | 4,365 | 4,340 | 4,335 |
| Total liabilities & equity | 5,246 | 4,841 | 4,698 | 4,699 | 4,709 |
Key metrics
| Jun-23 | Jun-24 | Jun-25F | Jun-26F | Jun-27F | |
|---|---|---|---|---|---|
| Revenue growth (%) | (69.4) | (21.3) | 38.9 | 15.0 | 8.0 |
| Recurrent EPS growth (%) | (115.5) | 103.7 | (63.1) | (75.3) | (79.6) |
| Gross margin (%) | 18.4 | 18.2 | 29.2 | 30.3 | 30.1 |
| Operating EBITDA margin (%) | (11.0) | (15.8) | 0.1 | 8.3 | 9.9 |
| Net profit margin (%) | (17.2) | (27.2) | (10.9) | (2.3) | (0.4) |
| Dividend payout ratio (%) | (95.1) | 0.0 | 0.0 | 0.0 | 0.0 |
| Capex/sales (%) | 74.4 | 81.8 | 16.7 | 14.5 | 13.5 |
| Interest cover (x) | (24.3) | (32.6) | (24.9) | (5.5) | (0.4) |
Source: Company data, RHB
Recommendation Chart
Recommendations & Target Price
Source: RHB, Bloomberg
| Date | Recommendation | Target Price | Price |
|---|---|---|---|
| 2025-05-22 | Sell | 0.6 | 0.7 |
| 2025-03-27 | Neutral | 0.7 | 0.7 |
| 2025-02-25 | Sell | 0.7 | 0.8 |
| 2025-01-09 | Sell | 1.0 | 0.9 |
| 2024-11-29 | Buy | 1.0 | 0.7 |
| 2024-10-06 | Buy | 1.0 | 0.7 |
| 2024-08-29 | Buy | 1.0 | 0.7 |
| 2024-05-29 | Buy | 1.0 | 0.7 |
| 2024-02-21 | Buy | 1.0 | 0.7 |
| 2024-01-05 | Buy | 1.1 | 0.8 |
| 2023-11-30 | Neutral | 1.0 | 0.8 |
| 2023-09-21 | Neutral | 0.9 | 0.7 |
| 2023-08-30 | Neutral | 0.8 | 0.6 |
| 2023-06-28 | Neutral | 0.8 | 0.7 |
| 2023-05-19 | Neutral | 1.0 | 0.8 |
Source: RHB, Bloomberg
RHB Guide to Investment Ratings
Buy: Share price may exceed 10% over the next 12 months
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
Take Profit: Target price has been attained. Look to accumulate at lower levels
Sell: Share price may fall by more than 10% over the next 12 months
Not Rated: Stock is not within regular research coverage
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Malaysia
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Indonesia
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Analyst Certification
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| Analyst | Company |
|---|---|
(2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
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