The Malaysian glove manufacturing sector is expected to experience a decline in revenue for the quarterly report with low average selling price (ASP) and sales volume.
Supermax Corp Bhd, Careplus Group Bhd and Rubberex Corp (M) which will release reports for the 4th quarter of financial year 2021 (4QFY21) this month, are expected to suffer the same fate as Hartalega Holdings and Kossan Rubber Industries Bhd.
Hartalega and Kossan had posted below -expected earnings for 4QFY21 despite having been revised several times by analysts in the previous quarter.
Now Supermax is the main focus as it will announce earnings results for 2QFY22 ending December 31, 2021.
For the record, in the last 1QFY22 Supermax has recorded a profit per share (EPS) of 24.6 sen which represents 61% of the FY22 consensus forecast of 40.3 sen EPS.
However, some analysts have revised Supermax’s earnings forecasts last month following allegations of forced labor practices and contract terminations from the Canadian government.
CGS-CIMB Research, which set a 'hold' target with a target price (TP) of RM1 for Supermax, said its assessment for the company 'did not take into account environmental, social and governance issues and their views on a more severe-than-expected decline in FY22 profits. FY24.
Moreover, MIDF Research in its note said that they believe Supermax will certainly be able to solve the problem of termination of labor contracts faster than its competitors, following feedback from the foreign worker management policy on January 3, 2022 which meets International Labor Organization labor standards.
Last week Kossan’s consensus EPS forecast for FY22 ending March 31, 2022 was revised below 27% at 14.3 sen after passing the FY21 EPS forecast of 5.82%.
For Hartalega, it surpassed the FY21 EPS forecast ended March 31, 2021 by 5.67% and the revision for the FY22 forecast dropped by 6.86% to 96.2 sen.
Meanwhile, the Top Glove EPS for 1QFY22 ended November 30, 2021 rose to 2.32 sen representing 21.09% for the full consensus forecast of FY222 EPS of 11 sen each.
