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MEGACHEM REPORTS SURGE IN NET PROFIT AFTER TAX OF 52.0% TO S$8.0 MILLION FOR FY2021
- Achieves record revenue of S$138.9 million in FY2021, supported by recovery in both business segments and higher sales volumes and prices
- Proposes final dividend of 1.2 cent per share, to make a total of 2.0 cents per share for FY2021, representing a payout ratio of 34.4%
- Maintains healthy balance sheet with sound liquidity and gearing of 0.51 time
https://links.sgx.com/1.0.0/corporate-announcements/QUGCNPMPFPNLS2E4/702760_News%20Release%20FY2021.pdf
- Achieves record revenue of S$138.9 million in FY2021, supported by recovery in both business segments and higher sales volumes and prices
- Proposes final dividend of 1.2 cent per share, to make a total of 2.0 cents per share for FY2021, representing a payout ratio of 34.4%
- Maintains healthy balance sheet with sound liquidity and gearing of 0.51 time
https://links.sgx.com/1.0.0/corporate-announcements/QUGCNPMPFPNLS2E4/702760_News%20Release%20FY2021.pdf
Megachem
On Nov11, Megachem $ MegaChem: 5DS 0% managing director Sidney Chew Choon Tee acquired 50,000 shares of the company for a consideration of S$21,250.
At 42.5 cents per share, this increased his total interest in the one-stop specialty chemical solutions provider from 35.47 per cent to 35.51 per cent.
Chew' s preceding acquisitions were on Nov 8, with 48,000 shares acquired at 43.0 cents per share and Oct 22 with 10,000 shares acquired at 42.0 cents per share.
Megachem
On Nov 8, Megachem $ MegaChem: 5DS 0% managing director Sidney Chew Choon Tee acquired 48,000 shares of the company for a consideration of S$20,400. At 43.0 cents per share, this increased his total interest in the one-stop specialty chemical solutions provider from 35.44 per cent to 35.47 per cent.
Mr Chew' s preceding acquisition of 10,000 shares at 42.0 cents per share was on Oct 22, 2021.
Megachem acquires Green Leaf Chemical for $3.4 mil
Megachem Limited announced that its 36.19%-owned associated company Megachem (Thailand) Public Company Limited, will be acquiring 55% of Green Leaf Chemical (" GLC" ) at a purchase consideration of THB 82.5 million ($3.37 million).Following the acquisition, Megachem Limited will have an effective indirect equity interest of approximately 19.9% in GLC, while PS Miracle Holding and Folium Co will retain their stakes of 25% and 20% respectively.
GLC is in the business of importing and distributing chemical materials for the manufacturing of personal care products such as cosmetics and nutraceuticals as well as providing service for clinical testing of such products.
The purchase consideration, which was agreed upon on a willing buyer and willing seller basis, will be satisfied wholly by cash and will be fully funded internally from Megachem Thailand.
In its media release issued on Sept 17, the group says, " The proposed acquisition by Megachem Thailand will enhance the group' s product portfolio and deepen our coverage of the personal care industry thereby strengthening our market position. We will also seek to derive synergistic value to deliver better customer propositions."
Shares in Megachem gained 9.52% or 4 cents on Sept 17, closing at 46 cents.
Megachem
On Sept 3, Megachem $ MegaChem: 5DS 0% managing director Sidney Chew Choon Tee acquired 35,000 shares of the company for a consideration of S$14,700.
At 42.0 cents per share, this increased his total interest in the one-stop specialty chemical solutions provider from 35.40 per cent to 35.43 per cent.
On Aug 12, Megachem reported 34.0 per cent year-on-year growth in net profit after tax to S$3.8 million for its H1FY21 (ended June 30).
This was on the back of higher sales across both the manufacturing and distribution segments due to improved business conditions.
With the results, Mr Chew noted that the company had continued to maintain diversification and increase depth in market penetration, as well as adopting a greater Asia-centric perspective.
He added that Megachem was thus able to emerge stronger from the Covid-19 pandemic, where its diversified supply chain only experienced minimal impact.
SAC lifts Megachem Limited' s TP to 55 cents on the back of record 1H21 results
SAC Capital analyst Lam Wang Kwan has kept " buy" on Megachem Limited with a higher target price of 55 cents from 50 cents previously on the back of its record results for the 1HFY2021 ended June.For the half-year period, Megachem' s earnings grew by 39.7% y-o-y to $3.8 million, while revenue increased 26.7% y-o-y to $65.9 million.
Both figures stood above Lam' s estimates for the FY2021.
His new target price translates into FY2021 price-to-earnings (P/E) of 11.4 times and price-to-book (P/B) of 1.3 times.
Lam has also upped his topline estimates for the FY2021 by 13.5% and bottom line estimates by 56.1% to factor in more customer wins and improved net margins from operating leverage.
In addition, he has increased his topline and bottomline estimates for FY2022 by 12.5% and 41.9% respectively.
In his report dated Aug 23, Lam has identified four tailwinds that the company is well-positioned to benefit from.
The factors, he adds, are sustainable into the 2HFY2021 as well.
First, an uncertainty in demand has resulted in customers opting for smaller and more frequent purchases from distributors like itself, instead of buying in larger quantities directly from chemical producers.
Second, the supply chain bottleneck also led to customers turning to sources that are nearer their manufacturing bases.
Third, Megachem also benefitted from the surge in demand for specialty chemicals used in cleaning and distribution, technology and healthcare sectors.
Finally, the firmer oil and commodities prices that lead to the increase in prices of specialty chemicals are also passed on to the customers.
These trends, he says, are likely to remain even after the Covid-19 pandemic.
Megachem is also well-positioned to ride on the capacity build-up of Malaysian glove manufacturers. It is also deemed to benefit from the capacity expansion of the semiconductor sector in Penang.
To this end, the company is building a new warehouse in Malaysia to position for the expected uptick in demand.
Shares in Megachem closed flat at 39 cents with an FY2021 dividend yield of 4.2%, according to SAC' s estimates.
SAC Research - Megachem: A record 1H, tailwinds sustainable into 2H
1H came in ahead of our estimate as the Group booked 26.7% revenue growth to S$65.9m (56.2% of our FY21E forecasts), its best half-year performance. Gross margin dipped slightly to 24.9% due to higher input costs and freight charges. Net profit of S$3.8m was 92.7% of our FY21E forecasts.
Megachem benefitted from the following tailwinds: 1) demand uncertainty resulted in customers opting for smaller and more frequent purchases from distributors like Megachem, instead of buying direct from chemical producers in larger quantities and hold stock 2) supply chain bottleneck led to customers turning to sources that are nearer their manufacturing bases. Megachem&rsquo s established global logistic network gives them the edge 3) surge in demand for specialty chemicals used in cleaning and disinfection, technology and healthcare sectors and 4) firmer oil and commodities prices pushing up the prices of specialty chemicals which are passed on to the customers. These trends are likely to stay post pandemic.
Maintain BUY at a higher target price of S$0.55 (from S$0.50). Our DCF-derived (COE:8.3%) target price translates into FY21E P/E of 11.4x and P/B of 1.3x. We raised our FY21E topline estimates by 13.5% and bottom line estimates by 56.1%, to take into account more customer wins and improved net margins from operating leverage. We have also adjusted our FY22E topline estimates and bottom line estimates upwards by 12.5% and 41.9% respectively.