SUPERMX: Core Loss Narrows on Improved Efficiency Amidst Market Headwinds

A prominent glove manufacturer reported a narrower core net loss for its first quarter of fiscal year 2026 (1QFY26), a performance largely attributed to significant improvements in cost efficiency. While the overall financial results surpassed internal expectations, the company continues to navigate a challenging market environment characterized by global oversupply and fluctuating demand.

For 1QFY26, the company recorded a total loss of RM134.6 million. However, excluding a substantial one-off impairment charge of RM119.5 million related to non-productive and closed plants, the core net loss stood at RM12.2 million. This core performance was notably within the investment bank’s expectations, covering 28.8% of the projected full-year loss.

Performance Review

On a quarter-on-quarter (QoQ) basis, the core net loss saw significant improvement, reducing by approximately RM44 million compared to the previous quarter’s RM19.6 million loss. This positive shift was primarily driven by a 34.8% increase in revenue to RM205.6 million, as customers resumed restocking activities and average selling prices (ASP) edged up by about 3.4%. Despite this QoQ improvement, revenue declined 8.5% year-on-year (YoY) as customers deferred orders amidst uncertainties surrounding shifting tariff developments and challenging conditions in non-US markets.

Future Outlook and Strategy

Looking ahead, the investment bank anticipates a gradual improvement in sales volumes, buoyed by rising global glove demand. However, the pervasive oversupply in the market is expected to persist for at least the next three years. This situation is further exacerbated by capacity expansion from Chinese manufacturers in Vietnam and Indonesia, which will continue to exert pressure on ASPs.

In response to these market dynamics, the company is actively working to enhance its US domestic manufacturing capabilities. Strategic initiatives include optimizing costs in Malaysia through the retirement of older plants and investing in automation to improve operational efficiency and competitiveness. The investment bank maintains its earnings projections for FY26-28 unchanged.

TA Securities maintains a “HOLD” recommendation on the company, with a target price (TP) of RM0.40 per share, based on 0.3x FY26 Price/Book (P/B) ratio. This TP represents a 7.2% upside from the last traded price of RM0.37. The “HOLD” rating reflects a balanced view, acknowledging improved operational efficiency but also persistent industry headwinds.