Investment Highlights

• Techbond Group Bhd began developing and manufacturing industrial adhesives, mainly used for woodworking applications in 1996, before expanding its product application to include paper and packaging products in 2001. Production was primarily carried out at its Shah Alam, Selangor Factory until 2005 when the group established its manufacturing facilities in Binh Duong Province, Vietnam. With a diverse customer base, Techbond’s adhesives and sealants can be used in various sectors including woodworking, paper and packaging, building and construction as well as the automotive sectors.

• The group’s main products are industrial adhesives, namely water-based and hot melt adhesives. Techbond also develops and manufactures sealants, albeit on a smaller scale and provides supporting products and services (i.e.: OEM industrial adhesives and sealants, spare parts and maintenance services) to its customers.

• To expand its operations, the bulk of its IPO proceeds (RM27.2 mln or 68.7%) will be used to finance the construction of the Vietnam-Singapore Industrial Park (VSIP2) Factory Complex in Vietnam as well the acquisition of new machineries and equipment for VSIP2 and Techbond’s Shah Alam factory.

• Techbond has delivered a historical three-year (FY15-FY18) net profit compounded annual growth rate (CAGR) of 12.3%, on the back of a historical three-year revenue CAGR of 10.9% to RM13.4 mln and RM86.8 mln respectively in FY18. At an indicative offer price of RM0.66 per share, Techbond trades at an estimated FY19 PER of 11.0x, below the average PER of its international peers at 13.0x-20.0x, indicating a reasonable upside potential.

Source: Mplus Research - 30 Nov 2018