KUALA LUMPUR, June 18 (Bernama) -- Bursa Malaysia’s key index finished marginally higher, supported by strong buying interest in consumer-related counters, amid mixed performance across regional markets. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose by 1.40 points, or 0.08 per cent, to 1,711.39 from Tuesday's close of 1,709.99. The key index opened 12.36 points firmer at 1,722.35 and moved between 1,711.31 and 1,722.63 throughout the session. Market breadth was negative, with losers leading gainers 678 to 493, while 549 counters were unchanged, 1,016 untraded and 34 suspended. Turnover increased to 4.50 billion units worth RM3.45 billion from 3.93 billion units worth RM3.45 billion on Tuesday.
Karex (5247.MY) jumped 12.4% to 95.5 sen at midday Thursday, valuing the world’s largest condom maker at just over RM1 billion, after CIMB Securities and AmBank Research both initiated coverage with “Buy” recommendations.
CIMB: RM1.60 Target, Structural Earnings Upcycle Ahead
CIMB assigned the most bullish target price of RM1.60, highlighting a multi-year structural earnings recovery driven by the mass-market rollout of Karex’s patented nitrile synthetic condom.
Global expansion: Karex’s exclusive partner (“Customer D”) has extended distribution to 18 countries, with a full global rollout in progress.
Capacity growth: Production capacity for nitrile condoms is expected to increase fivefold to 900 million pieces annually by FY2028.
High margins: The nitrile product commands premium pricing and gross margins above 50%, supporting profitability.
CIMB projects a 91.3% three-year core net profit CAGR (FY2025–FY2028) as Karex transitions from R&D spending to earnings delivery.
The house views FY2025 as an inflection point, citing:
Winding down of the glove venture.
Stabilizing ringgit easing forex headwinds.
Strengthening core condom operations.
“With legacy pressures fading, FY2025 marks the trough and the pivot — setting up a multi-year growth cycle,” CIMB said.
CIMB’s valuation uses 10x CY2027 PE, versus the global intimate wellness peer average of 18.8x, noting Karex remains undervalued despite its strong growth prospects. The research firm estimates a dividend yield between 1.9% and 5.9%.
AmBank: RM1.05 Target, Solid Growth Outlook
AmBank Research also started coverage with a “Buy” rating and RM1.05 target price, applying 23x forward PE on FY2027 earnings.
The firm expects Karex’s net profit to grow at a 15% CAGR over FY2024–FY2028, driven by the successful commercialisation of its synthetic condom technology.
Key Takeaway
Both CIMB and AmBank see Karex entering a new earnings phase, underpinned by innovation, stronger product margins, and expanding global distribution.
With over 5 billion annual production capacity and exports to more than 140 countries, Karex’s pivot from R&D-heavy investment to high-margin growth may position it as one of Malaysia’s most compelling small-cap turnaround stories in 2025–2028.
Comments
Post a Comment