Protected Profits: How the World’s Largest Condom Maker Turned a Global Crisis Into a "Covered" Investment Opportunity

Every so often, an investment story comes along that makes you pause — not because it is complex or obscure, but because it was hiding in plain sight the whole time. This week’s unlikely standout is Karex, a Malaysia-listed company that quite literally makes a product the world cannot afford to run out of — especially now.

According to recent reports from Reuters and The Straits Times, Karex is raising prices sharply as the ongoing US-Iran conflict squeezes global supply chains. That may sound like just another inflation story — until you realize what Karex actually does. It is the world’s largest condom manufacturer, producing more than five billion units annually. Its client list includes household names like Durex and Trojan, as well as public health heavyweights such as Britain’s National Health Service and programs backed by the United Nations.

In other words, Karex is not just in the business of protection — it is in the business of global necessity. And necessity, as investors know, is the ultimate pricing power.

Demand for Karex’s products has reportedly surged by about 30% in 2026. Meanwhile, shipping disruptions — echoing the same logistical headaches seen in oil markets — have stretched delivery times from roughly one month to nearly two. The result? Millions of units are effectively stuck at sea, creating shortages in regions that need them most. As CEO Goh Miah Kiat bluntly put it, there are “a lot more condoms actually sitting on vessels” instead of where they are urgently required. It’s a bottleneck situation — quite literally.

Now, here’s where things get interesting from an investor’s perspective. In most industries, raising prices during supply disruptions risks killing demand. But Karex operates in a category where demand is, shall we say, highly inelastic. When the alternative is significantly more costly — financially and socially — customers tend to absorb price increases without much resistance. That’s not just a business model; that’s a moat with… durability.

The numbers support the narrative. Karex is forecast to grow revenue at about 10.6% annually, from RM512 million (US$130 million) in 2025 to RM693 million (US$175 million) by 2029. But the real kicker is earnings. The company is expected to swing from a modest loss of RM1.51 million (US$382,000) in 2025 to a profit of RM292 million (US$74 million) by 2029 — an astonishing 79.7% annual growth rate. For context, that’s far above the Malaysian personal products industry’s expected earnings growth of 16.8%. Put differently, Karex isn’t just turning things around — it’s staging a full-blown rebound.

If those earnings materialize, and the market applies the industry’s average price-to-earnings multiple of 19.73 times, Karex could be worth approximately RM5.76 billion (US$1.46 billion) by 2029. That’s a dramatic jump from its current valuation of roughly RM690 million (US$175 million). Not bad for a company many investors, including me, didn’t even know existed — proof that sometimes the best opportunities are the ones we’ve been, well, overlooking.

There’s also a broader lesson here. Great businesses are often built on mundane, even unglamorous products — things people don’t talk about at dinner parties but cannot live without. Karex fits squarely into that category. It doesn’t rely on cutting-edge technology or speculative trends. Instead, it benefits from global population growth, public health initiatives, and a product with consistent, recurring demand. You might say its business model is… well-covered from multiple angles.

Of course, no investment is without risks. Supply chain disruptions that boost prices today could normalize tomorrow. Currency fluctuations, raw material costs, and regulatory dynamics in healthcare markets all remain factors to watch. But the core thesis — that Karex can raise prices in a tight market without killing demand — is a powerful one. In investing, pricing power is often the difference between a good business and a great one.

So yes, the world may be grappling with geopolitical tensions and shipping bottlenecks. But amid the chaos, Karex has found itself in an enviable position: selling more, charging more, and potentially earning much more. It turns out that in times of uncertainty, some businesses don’t just survive — they’re built to protect their profits.

And if that’s not a well-covered investment thesis, I don’t know what is.

This narrative appears in The International Investor.