Sorento Capital Bhd is projected to maintain a gross profit margin exceeding 40% in the financial year 2027 (FY27), supported by price dynamics in the ceramic bathroom products sector. The company recorded a gross profit margin of 45.2% in FY26, marking the highest level in its history despite the challenging conditions triggered by the ongoing US-Iran conflict.

According to TA Research, the margin improvement was largely driven by a reduction in original equipment manufacturer costs in China during the latter part of 2025. This adjustment enabled Sorento to achieve an even stronger gross profit margin of 47% in the fourth quarter of FY26. The research house highlighted that global brass prices surged by about 50% following the outbreak of hostilities between the US and Iran, which raised production costs for bathroom and kitchen taps. Conversely, ceramic bathroom product prices have declined due to the disruption in China’s exports to the Middle East caused by the conflict. These ceramic products have instead been redirected to Asian markets, exerting downward pressure on prices.

Management at Sorento has expressed confidence that this pricing environment will allow the company to sustain its gross profit margin above 40% in FY27. Additionally, the company has reported an increase in project sales orders for its Sorento-series sanitary ware, with the order book expanding from RM120 million to RM150 million. The company anticipates securing approximately RM80 million in new orders for each fiscal year in FY27 and FY28.

Financially, Sorento’s net cash position stood at RM42.7 million as of June 2026, slightly higher than RM40.5 million a year earlier. The company also improved its operating cash flow to RM31.8 million in FY26, reflecting its growing profitability. Inventories increased marginally to RM33.8 million by the end of FY26 compared to RM32.1 million previously. These liquidity and inventory levels are expected to adequately support revenue projected at RM203 million for FY27.

Sorento continues to maintain low debt levels, with total borrowings expected to stay below RM1 million for FY27. The company also has RM4.4 million in unutilized proceeds from its initial public offering available for potential network expansion or branding and marketing activities.

Since launching the Sorento Lite range in April 2026, the company has expanded its sales network to more than 200 hardware outlets nationwide. It remains on course to meet its target of adding 500 new retail touchpoints annually across Malaysia for the next three years. Moreover, Sorento has introduced 50 new stock-keeping units to its plumbing fittings line, enhancing the product range offered for bathroom and kitchen renovations. The company’s expansion into complementary product categories, including kitchen hoods, hobs, and ovens, is progressing as planned with a targeted launch set for 2027.