Notes from $SAMCHEM / 5147 (SAMCHEM HOLDINGS BERHAD) 's quarterly briefing:

1. They are involved in basically all sectors and industries. Largest sectors are mainly
-Foams
-Paint and Coating
-Printing/Ink
-Adhesives

2. Warehouses are the Major cities of Malaysia, Indonesia, and Vietnam.

3. They have their own fleet of logistics for normal cargo and bulk cargo.

4. Demand remains subdued due to slow factory activities. Exports to eurozone, US, China have been contracting. However, VN and SG subsidiary shown volume growth.

5. New warehouses in MY and VN to cater for next uptake. Pulau Indah warehouse officiated last month is already at near full capacity.

6. China chemicals ASP seen rebounding, thus reducing spread between China and global chemicals.

7. Some chemical makers are cutting production due to poor ASP-- thus tightening supply. Nevertheless, customers will probably still remain prudent in inventory management.

Financial reslts

8. Lower revenue due to lower realized ASP. However, QoQ, sales volume increased 7%. QoQ PBT, excluding one off gain last Q, actually increased around 25%.

9. PBT margin lower than usual due to Buying 15 new trucks for bulk and cargo trucks.

10. More principals are relocating production into SEA and APAC region which will benefit them.

11. The principals continue to prefer to outsource distribution to simplify their process.

12. New term: ALT-ASIA = Alternative Asian supply chain to China. Malaysia, Indonesia, Vietnam, Singapore are part of this. China labour costs are no longer cheap, and more expensive than some SEA countries.

13. China specifically has issued new environmental regulations that has stricter scrutiny. Some smaller players in China may not comply, and this could force them to shut down which would reduce supply too.

Q&A

14. Which will rebound better, MY or VN?
-We will be very cautious in VN due to their proximity to China-- thus very tight competition
-In Malaysia, we are seeing lots of FDI flowing in. Big demand from construction as FDI are building new plants.

15. PIIP is a consolidation of rented warehouses. Increase volume by around 40%.

16. Aggressively expanding logistics business. Currently around 50 trucks, and plan to expand to 100 trucks. How many are used in house vs external?
For cargo logistics, mostly internal consumption. About 25-30% used for 3rd parties-- could be other customers or to principals.
For bulk cargo, about 70% for external business, and around 30% for internal use.

17. Samchem's 5 year avg dividend payout is around 37% and they intend to keep it around there. The goal is to improve dividend by improving group earnings.