Global condom market growth lifts Karex's outlook

PETALING JAYA: Analysts expect the global condom market to grow faster than the global economy, driven by rising sexual health awareness, a shift from government to private sector procurement and greater eCommerce adoption.
This is expected to bode well for condom maker Karex Bhd , said Kenanga Research.
'This trend favours large, innovative manufacturers like Karex, which is well-positioned to capture more market share, high-value condom and lubricant orders through its diverse product portfolio, regulatory reach, and strong environmental, social and governance credentials.
'While near-term sales may be affected by evolving tender commercial dynamics, the group sees medium-term growth opportunities – particularly its higher margin synthetic condoms and lubricant products, which are gaining traction in key markets.'
For its third quarter of financial year ended March 31, 2025 (3Q25), Karex's net profit dipped to RM5.09mil from RM6.02mil in the previous corresponding quarter, while revenue improved to RM135.72mil from RM127.05mil a year earlier.
In a filing with Bursa Malaysia, Karex said the higher revenue was primarily due to stronger sales of both condoms and personal lubricants during the quarter.
'Despite the increase in sales, the implementation of minimum wage increases in Thailand and Malaysia, heightened logistics costs stemming from trade disputes and less favourable foreign-exchange rate movements resulted in a decrease in profitability.
'As a result, the 3Q25 profit before tax of RM6.6mil represented a decrease of RM1.7mil in comparison to the corresponding quarter in the previous financial year,' it said.
For the nine-month period of financial year ended March 31, 2025 (9M25), Karex's net profit dropped to RM9.67mil from RM18.6mil, while revenue fell to RM377.63mil from RM383.93mil a year ago.
Kenanga Research said 9M25 net profit fell short of expectations, accounting for only 47% of its forecast and 52% of consensus estimates.
'A five sen dividend was declared for the quarter, unchanged year-on-year.'
Despite the improved outlook, the research house lowered the company's financial year 2025 (FY25) and FY26 net profit forecasts by 32% and 16%, respectively, to RM14mil and RM38mil after incorporating the weak 3Q25 results.
It also reduced its margin assumptions to align with the prevailing trends.
Correspondingly, it lowered its target price by 16% to 90 sen from RM1.07 previously, with an unchanged targeted FY26 price-to-earnings ratio (PER) of 25 times.
'This represents a 20% premium to the average historical five-year forward PER of its international peers to reflect its dominant market position and strong growth prospects.'

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Borneo Post

3 days ago

• Borneo Post

Solarvest secures Brunei's largest solar project, boosting order book to RM1.3 billion

Construction is expected to begin in the third quarter this year with completion targeted by the end of 2026. –Malay Mail photo KUCHING (June 19): Solarvest Holdings Berhad has secured Brunei's largest 30 megawatt (MW) solar photovoltaic (PV) power plant project, a move analysts say will strengthen its earnings visibility and boost its outstanding order book. The team with Kenanga Investment Bank Bhd (Kenanga Research) said the contract, worth RM100, will lift the group's year-to-date (YTD) job wins to RM604 million, on track to to hit its target of RM1.2 billion in financial year 2026 (FY26). The house also expects the project to deliver gross profit margin between 13 to 15 per cent, contributing to a total order book of RM1.3 billion. On June 16, the group said the project will be undertaken through Seri Suria Power (B) Sdn Bhd, a joint venture Solarvest's wholly-owned subsidiary Atlantic Blue (34 per cent), Serikandi Oilfield Services (36 per cent), and Khazanah Satu (30 per cent). The JV also signed a 25-year power purchase agreement (PPA) with Brunei's Department of Electrical Services (DES), under the Prime Minister's Office to develop and operate a 30MWac solar Kampong Belimbing, Kota Batu. Construction is expected to begin in the third quarter this year with completion targeted by the end of 2026. The engineering, procurement, construction and commissioning (EPCC) work will be handled by Serikandi Solarvest, a separate JV between Solarvest Borneo (49 per cent) and Serikandi Holdings (51 per cent). 'This contract adds positively to Solarvest's job wins, bringing its YTD tally to RM604 million. It also lifts the group's total order book to RM1.3 billion, comprising 81 per cent large-scale solar (LSS) and 19 per cent commercial and industrial (C&I) projects. 'This will keep the group busy for at least over the next 18 months,' Kenanga Research said. The house added that the project is expected to yield a higher tariff of 18 to 20 sen per kilowatt-hour (kWh) compared to the 13 to 16 sen per kWh rate under Malaysia's LSS5 programme. Based on current panel prices, the internal rate of return (IRR) is estimated at around 10 per cent. RHB Investment Bank in a separate note said management expects the project's IRR to be in line with Malaysia-based projects, ranging from high single digits to low teens. The total capital expenditure is estimated at BND35 million, structured with a 70:30 debt-to-equity ratio. Based on Solarvest's 34 per cent stake, the project is expected to contribute RM2 to RM3 million in earnings per year. Excluding project financing, the group's net gearing is projected to rise to approximately 0.21 times. brunei corporate news solar energy Solarvest

BusinessToday

6 days ago

• BusinessToday

Ringgit Influenced By External Dynamics With Limited Domestic Catalysts

The Malaysian Ringgit maintained its stability this week, trading within a narrow range of 4.22 to 4.24 against the US Dollar, largely benefiting from a weaker greenback. Kenanga Research noted that the Ringgit's performance continues to be primarily influenced by external market dynamics, with limited domestic catalysts. The week began with the Ringgit initially softening following robust US Non-Farm Payroll (NFP) data, which dampened expectations for immediate Federal Reserve interest rate cuts and boosted the USD on firmer yields. However, the Ringgit soon regained ground as positive US-China trade discussions improved broader risk sentiment. Subsequently, softer US Consumer Price Index (CPI) figures shifted the market narrative towards a more dovish outlook for the Fed, reinforcing expectations of easing monetary policy and pushing the DXY (US Dollar Index) below the 98.0 level. Despite robust US Treasury auctions, the US Dollar remained subdued, suggesting that domestic demand, rather than foreign appetite, was the primary driver of any strength. This trend, according to Kenanga Research, lends some weight to the ongoing de-dollarisation narrative. Looking ahead, market participants will keenly watch next week's US retail sales data, which is expected to contract by 0.7% month-on-month, ahead of the Federal Open Market Committee (FOMC) meeting. While the Fed fund rates are widely anticipated to remain unchanged, any dovish tone from the Fed could put further downward pressure on the US Dollar. Kenanga Research projects that rising Brent crude oil prices amid Israel-Iran tensions might offer some temporary support to the US Dollar, but the broader trend is still seen favoring a weaker greenback. For the upcoming week, the Ringgit is expected to trade around its current level as markets monitor developments in US-China trade talks and the Israel-Iran conflict. The upcoming release of US Treasury data on foreign holdings will also be scrutinised for any signs that a 'Sell America' trend is gaining traction among international investors. Technically, the USDMYR remains neutral, hovering around its 5-day Exponential Moving Average (EMA) of 4.23. Near-term movements are expected to hinge on external factors, with initial support identified at 4.23 (S1) and resistance at 4.25 (R1). Related

The Star

12-06-2025

• The Star

Healthcare sector revenue to continue rising in 2H

Private healthcare operators are less affected by the recently announced imposition 6% sales tax. PETALING JAYA: The earnings momentum for private healthcare, health supplements and pharmaceuticals providers will continue into the second half of this year (2H25) as demand for such services and goods keep rising. Private healthcare operators are also less affected by the recently announced imposition 6% sales tax. Kenanga Research said both IHH Healthcare Bhd 's Malaysian operations and KPJ Healthcare Bhd have manageable medical tourism revenue of around 5% to 7% to help offset the impact of the tax. The research house, which has an 'overweight' call on the sector, said, generally, private healthcare players recorded mixed results in first quarter of this year (1Q25). It said IHH's revenue intensity will continue to improve, driven by higher patient throughput, both from its domestic and international markets. Meanwhile, KPJ Healthcare has guided for narrower losses in its hospitals that are undergoing expansion, although the quantum of improvement appears smaller. The group is optimistic about earnings gaining momentum in 2H25 supported by better operational efficiencies stemming from ongoing cost optimisation efforts. In terms of price-earnings (PE) valuation, KPJ is trading at 36 times this year's forecast earnings and 31 times for next year, compared with Thailand's Bumrumgrad Hospital and Bangkok Dusit at PEs of 17 times and 20 times, respectively. Beyond this year, KPJ will add 800 beds, bringing its total to 5,200, largely via brownfield expansion. With capital expenditure of between RM300mil and RM400mil this year, the group is looking at merger and acquisition opportunities for future growth. It is also looking at acquiring yield accretive hospitals or assets that are complimentary to its core business for future growth. In pharmaceuticals, Kenanga Research said Duopharma Biotech Bhd is expecting strong orders from the of Health Ministry this year. The research house said Duopharma's management expects sales to the public sector in the second quarter to account for 55% to 60% of its top line and also higher private-sector contributions, compared with 47% to 50% historically. Kenanga Research also said it likes Kotra Industries Bhd for its integrated business model encompassing the entire spectrum of the pharmaceutical value chain, from research and development, product conceptualisation to manufacturing and sales. Kotra manufactures and sells over-the-counter supplements and nutritional and pharmaceutical products under household brands such as Appeton, Axcel and Vaxcel. The company also enjoys superior margins in its original-brand manufacturing business model versus low-margin contract manufacturing. Elsewhere, Nova Wellness Group Bhd 's slow ramp-up of production at its new plant will likely drag top line contribution and hit margins due to worse-than-expected economies of scale. Its earnings growth is driven by capacity expansion, a widening distribution network and penetration into local public hospitals, Kenanga Research added.