has cautioned that there could be a material adverse impact on its financial performance should efforts to divert its US glove shipments to other markets be unsuccessful.The glove maker said in a filing with Bursa Malaysia that the extent of the adverse impact will also be determined by the duration of the withhold release order by the US Customs and Border Protection (CBP).
On Oct 21, Supermax announced that it had been served with a withhold release order by the US CBP that would affect its sales to the US market, which accounts for about 20% of the group's total sales.
Consequently, the group said it would take steps to divert goods bound for the US to other markets where possible.
Research firms covering the stock have projected that the US import ban would have a negative impact on Supermax's earnings, and reduced their earnings forecasts accordingly.
TA Securities Research said in an Oct 22 note that it expects the diversion of shipments to flush other markets and depress ASPs.
It said the ASPs in these markets are usually 5% to 10% lower compared to the US, and that the additional shipments would further lower prices.
TA Securities, which has a "sell" call on Supermax, slashed its target price to RM1.43 a share from RM1.90 previously.
Kenanga Research, meanwhile, said on Oct 22 that a US ban on Supermax gloves would further compound an earnings decline caused by a faster-than-expected normalisation in the ASP of gloves.
According to Kenanga, Top Glove Bhd's recent 4QFY21 results briefing suggested that its ASPs have dropped faster than expected at 31% quarter-on-quarter to US$48 per 1,000 pieces.
"The severity to earnings depends on how fast Supermax can replace loss of sales in the US and how long it takes for the group to resolve the issue," it added.
Kenanga maintained its "market perform" recommendation on the stock as it expects disappointment in subsequent quarters to be capped given that ASP are no longer lofty.
It reduced its target price to RM2.15 from RM2.35 previously.
At 12.30pm, Supermax shares were trading 10 sen or 4.93% lower at RM1.93 a share on the back of 13.3 million units traded.
The stock has lost over 14% of its value since the announcement of the withhold release order by the US CBP on Oct 21.