The glove maker’s shares have surged almost 39% over the past month, and 26% year-to-date. It rose to its highest in nearly three years this morning when it reached an intraday high of RM1.19.
At the mid-day break, it was up 7.3% or 8 sen at RM1.18, valuing the company founded by Stanley Thai and his wife, Cheryl Tan, at RM3.21 billion.
Supermax announced in December 2021 it would set up its first manufacturing facility in the US on 215 acres in Texas. To be built over four phases by its wholly owned US subsidiary Maxter Healthcare Inc, it will have an annual production capacity of 19.2 billion pieces of gloves when fully completed.
Phase one, which entails capital expenditure of US$350 million (RM1.56 billion), will have a total production capacity of 4.8 billion pieces of nitrile gloves per annum.
The company’s US expansion was seen by some as a major risk as it was facing a ban on its glove imports into the country when it first unveiled its plan to establish a US plant.
In October 2021, the US Customs and Border Protection barred Supermax’s imports over alleged forced labour practices. The ban was lifted some two years later in September 2023 following the “successful remediation of forced labour indicators”.
Unexpected boost
On hindsight, Thai’s decision to set up a production facility in the US was prescient as a couple of key developments have since given the venture an unexpected boost.
The first was the recent decision by the US Trade Representative to increase and pull forward tariffs on China-based medical glove imports by 50% in 2025 and to 100% in 2026. This is seen as a major advantage for US-based glove manufacturers including Maxter Healthcare, giving Supermax an edge over its China-based competitors.
The other is the proposal by US Centers for Medicare and Medicaid Services (CMS) to include nitrile gloves under its payment adjustment scheme under the Medicare and Medicaid programmes.
Under this scheme, buyers will be compensated for the additional costs of purchasing domestically manufactured gloves, which are costlier to produce.
This aims to promote domestic manufacturing of nitrile gloves in the US as such gloves are a critical personal protective equipment (PPE).
In a note, CIMB Securities said CMS intends to propose the modification for implementation from Jan 1, 2026.
“With this scheme, we believe that demand for US domestic manufactured gloves will be robust, leading to high demand for Supermax’s US-produced glove products. This will also allow Supermax to sell its products at higher average selling prices (ASPs) to pass on the additional manufacturing cost,” it noted.
According to CMS, the current ASP differential between US domestically manufactured gloves and imported ones stands at 13 cents per piece. There are only three manufacturers of nitrile gloves in the US and over 95% of nitrile gloves sold there are imported.
CIMB Securities has upgraded its recommendation on Supermax from “hold” to “buy”, with a target price of RM1.15.
“Our upgrade is premised on the improved operating environment for glove makers, including Supermax, as well as better prospects for its US glove manufacturing facility, with ongoing US government initiatives to drive US glove production,” it said.
Meanwhile, Supermax extended its streak of losses to seven quarters, attributing it to a 77% rise in operating expenses and unrealised foreign exchange (forex) losses totalling RM45.6 million.
Net loss for the first quarter ended Sept 30, 2024 (Q1 FY2025) was RM64.6 million compared with RM2.05 million last year. However, quarterly revenue rose 26% year-on-year to RM224.65 million as demand ticked up.
Respite for Thai
The positive vibes generated by Supermax’s US venture and spike in its share price appear to have vindicated Thai’s decision to diversify into the US market in a big way. It has also brought some respite from his personal predicament.
Thai, 64, and Tan, 63, who were married in 1987, are currently undergoing divorce proceedings.
According to the company’s 2024 annual report, they jointly hold a 40.7% stake in Supermax through their private vehicle Supermax Holdings Sdn Bhd (SHSB).
Thai, who is Supermax executive chairman, holds a 57.5% stake in SHSB while Tan holds the remaining 42.5%. Based on the current price, its 40.7% stake in Supermax is worth RM1.31 billion.
In April this year, news reports indicated Tan had filed a winding-up petition against SHSB to enable her to directly own the shares in the glove maker.
However, Thai said SHSB was set up to establish a family trust for their three children and future generations, and hence would resist any application to wind up SHSB, according to news reports.
In April 2023, their daughter, Cecile Jaclyn Thai, resigned as non-executive director after a series of disagreements with the board.
In her resignation letter, Cecile said she resigned over the board’s alleged failure to uphold corporate governance practices and their fiduciary responsibilities.
She also alleged she experienced “bullying and silencing” from other board members, including her father, while trying to uphold her fiduciary duties.
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