Texchem Resources Berhad

$TEXCHEM / 8702 (TEXCHEM RESOURCES BERHAD)
Research by RHB

KUALA LUMPUR: Texchem Resources Bhd is confident that the group will remain resilient and sustain its performance in the coming quarter.

$TEXCHEM / 8702 (TEXCHEM RESOURCES BERHAD) -Highlights from Polymer Engineering, Industrial, Food, and Restaurant Divisions

Polymer Engineering:
The polymer engineering division is poised to benefit from the recovery in the hard disk drive (HDD) and semiconductor industries, along with steady demand from medical life science clients. Several high-margin projects are gaining momentum, with more initiatives expected to further boost profit margins and operational efficiency.
Industrial Division:

The industrial division is seeing a rebound in sales as customer inventory adjustments ease and chemical prices stabilize. The recent rise in chemical prices is expected to enhance margins, thanks to lower inventory costs. The division’s focus on bulk chemicals is yielding positive outcomes, with anticipated growth in sales and market share.

Food Division:
The food division has faced challenges due to foreign exchange (FX) control measures in Myanmar, which initially required converting a significant portion of export proceeds into local currency at unfavorable rates. However, the recent relaxation of these measures should help reduce losses.

Restaurant Division:
Sales momentum is expected to continue into the second half of 2024, aided by seasonal factors. The division has also consolidated suppliers, improving bargaining power. The strengthening of the Malaysian ringgit (MYR) is anticipated to lower raw material costs. The company has recently expanded into Indonesia and plans to open four new stores in FY24, which could drive significant growth given the large market potential.


The polymer engineering division stands out with its impressive projected growth, driven by recovery in key sectors and new high-margin projects. The industrial division’s focus on bulk chemicals and improving margins indicates steady performance. The food division is actively mitigating external challenges by diversifying supply chains and focusing on local sales, which should stabilize its operations. Meanwhile, the restaurant division is showing strong sales growth following restructuring, with expansion into Indonesia offering additional upside potential. Overall, the company appears to be executing well across its divisions, positioning itself for strong future growth.

$TEXCHEM / 8702 (TEXCHEM RESOURCES BERHAD)
Research by RHB
BUY – TP RM1.44

" Poised For An Earnings Upturn; Keep BUY”

We emerged from Texchem Resources’ post-results briefing feeling upbeat on its prospects. We believe the worst is over, and TEX is poised for a sustainable turnaround, driven by a strong recovery in its polymer engineering and industrial divisions. While we conservatively factor in muted contributions from the restaurant and food divisions in our SOP valuation, there is already ample upside to the TP – making it a compelling case

Analyst:
Tai Yu Jie
tai.yu.jie@rhbgroup.com
Lee Meng Horng
lee.meng.horng@rhbgroup.com

$DUFU / 7233 (DUFU TECHNOLOGY CORP. BERHAD) - Expects that the worst is over

From what I've been reading over the years, DUFU's management team has always been on the conservative side when making any statements and forecasts. So now, for the first time in a while, that their tone has started to turn positive, it's worth paying attention to.

Dufu had just announced a pretty solid set of results, with PAT rising about ~90% QoQ and ~150+% YoY, understandably coming from a low base, alongside another 1.5sen dividend. For those who had been following the memory market, you'd know that it was one of the hardest hit sectors vs other tech supply chains; but the latest results are not particularly surprising considering that both WD and Seagate had reported improving numbers in recent months.

Even other HDD players like $TEXCHEM / 8702 (TEXCHEM RESOURCES BERHAD) $NOTION / 0083 (NOTION VTEC BERHAD) $JCY / 5161 (JCY INTERNATIONAL BERHAD) in bursa alluded to the improving prospects in the sector.

On one hand, since the information is already "quite widely known", I wonder if the good numbers are already priced in considering DUFU had rallied from ~RM 1.7 to ~RM 2.3 this year. However, regardless of that, I, and so does DUFU's management, believe that the memory sector is reaching that pivoting point where "the worst is over" and we may start to see incremental improvements over the longer term here.

1. DUFU says that 2023 was "the lowest point" in the HDD market cycle, and that they are at the tail end of an unprecedented market downturn.

2. Within their operational businesses, they are seeing modest increase in demand.

3. They believe that the global semiconductor sales are picking up, and that the memory sector is seeing a potential onset of a new growth cycle.

4. Inventory adjustments has been completed and they are seeing increased demand in electronics and AI-related applications.

5. They are confident that the toughest phase is over and are looking towards growth again.

$TEXCHEM / 8702 (TEXCHEM RESOURCES BERHAD)
Research by RHB
Buy – TP RM1.44

“Return To The Black; Still BUY"

Still BUY and MYR1.44 TP, 71% upside. 1H24 results met expectations, showing a strong rebound in the polymer engineering division and gradual improvements across other business units. We believe the worst is over, and anticipate a sustainable turnaround – driven by further volume recovery. The current valuation is appealing in view of Texchem Resources’ well- established and diverse businesses with sturdy balance sheet and strong cash flow generation.

Analysts:
Tai Yu Jie
tai.yu.jie@rhbgroup.com
Lee Meng Horng
lee.meng.horng@rhbgroup.com

OTHERSTEXCHEM RESOURCES BHD
TERMINATION OF FACSIMILE LINE AT THE REGISTERED OFFICE

$TEXCHEM / 8702 (TEXCHEM RESOURCES BERHAD)
Research by RHB
Buy (Maintained) - TP RM1.44

"Signs Of Earnings Rebound; Keep BUY"

Maintain BUY and MYR1.44 TP, 62% upside, c.3% yield. Although Texchem Resources’ 1Q24 results missed expectations, we see the rebound in the industrial and polymer engineering divisions as a positive sign. Earnings are expected to improve across all business units on further volume recovery and seasonal factors. Its current low valuation presents an attractive entry point into the diverse businesses, supported by a solid balance sheet and strong cash flow generation.

Analysts:
Tai Yu Jie
tai.yu.jie@rhbgroup.com
Lee Meng Horng
lee.meng.horng@rhbgroup.com

Change in Boardroom - PUAN MARIAM BINTI JAMAL

Change in Remuneration Committee - PUAN MARIAM BINTI JAMAL

Change in Audit Committee - PUAN MARIAM BINTI JAMAL

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

Change in Remuneration Committee - DR ZARIZANA @ IZANA BINTI ABDUL AZIZ

Change in Boardroom - DR ZARIZANA @ IZANA BINTI ABDUL AZIZ

Change in Audit Committee - DR ZARIZANA @ IZANA BINTI ABDUL AZIZ

Change in Nomination Committee - DR ZARIZANA @ IZANA BINTI ABDUL AZIZ

Change in Nomination Committee - PUAN AZIAN BINTI MOHD YUSOF

General Meetings: Outcome of Meeting

$DUFU / 7233 (DUFU TECHNOLOGY CORP. BERHAD)

Just collect when below RM2.10, it is a buying opportunity. With recovery of HDD Industry, its top and bottom line will improve going forward. I am looking at valuation above RM3 when Q3 result is out in November 2024. I am hearing strong performance in HDD in both Dufu and
$TEXCHEM / 8702 (TEXCHEM RESOURCES BERHAD)

Annual Report & CG Report - 2023 (Amended Announcement)

Annual Report & CG Report - 2023

CIRCULAR TO SHAREHOLDERS IN RELATION TO PART A - PROPOSED RENEWAL OF EXISTING SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE PART B - SHARE BUY-BACK STATEMENT IN RELATION TO THE PROPOSED RENEWAL OF EXISTING SHARE BUY-BACK AUTHORITY

General Meetings: Notice of Meeting

OTHERS1. PROPOSED RENEWAL OF EXISTING SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY
TRANSACTIONS OF A REVENUE OR TRADING NATURE

2. PROPOSED RENEWAL OF EXISTING SHARE BUY-BACK AUTHORITY

$TEXCHEM / 8702 (TEXCHEM RESOURCES BERHAD)
Research by RHB
Buy (Maintained) – TP of MYR1.44

“Recoveries In Industrial And Polymer Divisions; BUY”

Keep BUY, with new MYR1.44 TP from MYR1.50, 49% upside. Texchem Resources’ FY23 results missed expectations on slower-than-expected recovery. That said, following a lacklustre share price performance (-56%) in FY23 due to weak results and margins compression, TEX could be a laggard play into FY24 that is poised to benefit from volume recovery, particularly from industrial and polymer engineering divisions. The current depressed valuation offers a good entry into the diverse businesses, coupled with solid balance sheet and strong cash flow generation.

Analyst(s):
Tai Yu Jie
tai.yu.jie@rhbgroup.com
Lee Meng Horng
lee.meng.horng@rhbgroup.com

Quarterly rpt on consolidated results for the financial period ended 31/12/2023

Change of Company Secretary - CATHERINE SIEW SEEN WA

Change of Company Secretary - LOH SAU MUN

KUALA LUMPUR: RHB Investment Bank research (RHB Research) expects Texchem Resources Bhd to post a net loss of RM7.6 million for financial year 2023, compared with a previous projection of RM5 million net profit, following a dismal third quarter (3Q).

© New Straits Times Press (M) Bhd

$TEXCHEM / 8702 (TEXCHEM RESOURCES BERHAD)
Research by RHB
Buy (Maintain) – Target Price RM1.50

“Bottoming Out; Keep BUY”

Keep BUY, new MYR1.50 TP from MYR2.23, 84% upside. Texchem Resources showed promising signs in 3Q23 as losses narrowed, driven by improved market demand and more favourable seasonality. While acknowledging recent weak results, we anticipate a further narrowing of losses – leading to a turnaround in FY24, thanks to the gradual improvement in market conditions and the low FY23 base. The current depressed valuation offers a valuable entry point into an established company with diverse and underappreciated businesses.

Analysts:
Lee Meng Horng
lee.meng.horng@rhbgroup.com

Tai Yu Jie
tai.yu.jie@rhbgroup.com