$SAMCHEM / 5147 (SAMCHEM HOLDINGS BERHAD) ‘s QR for Q4FY2023 is out and that sums out their FY2023 with another year of profitability despite unfavorable biz environment.

Samchem’s results are improving QoQ since Q4FY2022 but their rev and profits are trending down from FY2020 till FY2023. Moreover, their profit for FY2023 is the also lowest since FY2020. So, what’s going on with chemical demand?

Let’s delve into the numbers!

# Comparing current quarter (Q4FY2023) with preceding year corresponding quarter (Q4FY2022):

- Rev is up by 13% to RM 308.31 mil due to increase in sales vol.
- COS/Rev is slightly lower from 91% to 87%.
- Other Income improved significantly from a loss amounting RM 3.4 mil to a gain of RM 5.5 mil.
- Administrative expenses and Selling & Distribution expenses increased by 26% and 165% respectively despite rev only increased by 13%. However, Other operating expenses recorded an inflow of RM 1.12 mil instead of an outflow.
- Total expenses are up 9% to RM 25.50 mil.
- PBT and PAT also gained significantly from loss making to a gain of RM 19.21 mil and RM 13.10 mil respectively due to higher profit margins and higher contributions from other income.
- EPS improved from -0.39 sen to 1.90 sen.
- Net profit margin shot up from -0.8% to 3.4%.
- NOCF deteriorated from a positive of RM 69.7 mil to a negative of RM 10.31 mil.
- Rev segregation by geographic: Malaysia (48%), Indonesia (6%), Vietnam (43%) and Singapore (3%). Vietnam’s rev increased by the most (24%).
- Indonesia and Vietnam’s operation which was loss making previously, also turned profitable.

# Comparing current quarter (Q4FY2023) with immediate preceding quarter (Q3FY2023):

- Rev dropped by 4% to RM 308.31 mil.
- Other income increased by 64% to RM 5.5 mil.
- Total expenses decreased by 1% to RM 25.50 mil.
- PBT improved by 55% to RM 19.12 mil due to better gross profit margins.
- PAT also improved by 35% to RM 13.10 mil.
- Net profit margin rose from 2.6% to 3.4%.

# Comparing FY2023 with FY2022:

- Rev is down by 12% to RM 1.16 bil due to lower ASP.
- Other income gained 98% to RM 16.56 mil.
- Total expenses decreased by 2% to RM 96.25 mil.
- PBT dropped by 21% to RM 47.97 mil due to lower margins.
- PAT also dropped by 22% to RM 35.39 mil.
- Net profit margin declined from 3.2% to 2.6%.
- Net debt of RM 85.35 mil.

# Prospects:

- Chemical demand was subdued earlier in FY2023.
- However, the pick-up in demand and stabilizing prices across key markets in recent months offer optimism for further improvements in the market.
- Over the past year, the management have expanded their warehousing capacity in both Malaysia and Vietnam. This expansion is pivotal to facilitate their penetration into new client’s segment and to broaden their product portfolio offering.
- Furthermore, the management also aims to capitalize on the potential opportunities arising from both the shifting trends of Chinese manufacturer’s supply chain, as well asn the relocation of global chemical plants to this region.
- The management remains cautiously optimistic on a more favorable overall operating environment, particularly in 2H2024.
- This outlook is bolstered by anticipated improvements in the economic landscape and heightened demand driven by increased construction and infer activities within their key markets.