Hextar Global Bhd

Change of tides, post RTO

• Post RTO, product distribution of agrochemicals and fertilizers has surged from below 100 products to well over 500 products. Agrochemical business to play a key role in earnings sustainability, while the manufacture and distribution of healthcare disposable products expected see improving demand on the rising healthcare awareness from the public.

• Completion of industrial land sale for RM30.0m will improve bottom line margins from interests cost saving. Technically, price has experienced a consolidation breakout above RM0.64 accompanied by rising volumes, targeting RM0.73- RM0.75 with long term target at RM0.835.

Trading Catalyst

• Following the completion of reverse-takeover-offer (RTO), Hextar Global Bhd (Hextar) product distribution of agrochemicals and fertilizers has surged from below 100 products to well over 500 products. As a result, Hextar has returned to the black for the past three consecutive quarters. Hextar’s products are exported to countries like Vietnam, Hong Kong, the Philippines, Cambodia and Singapore through established distributors, hypermarkets, supermarkets and dealer network.

• Given that the agriculture industry is an important industry in Malaysia in ensuring food security, we see Hextar’s agrochemical business to play a key role in earnings sustainability. Meanwhile, the manufacture and distribution of healthcare disposable products such as wet wipes, tissue and cotton-based products is expected see improving demand on the rising healthcare awareness from the public. Moving forward, the group will continue with its expansion plan by embarking on 5G technology in the plantation industry in bid to improve operational efficiency.

• Also, we note that the recent completion of industrial land sale for RM30.0m with the proceeds mainly channeling to repayment of borrowings will result in a leaner balance sheet and improved bottom line margins from interests cost saving.

Technical Outlook

• Technically, share price has found stability over the past month, trading in a range bound manner. Price has experienced a consolidation breakout above RM0.65 accompanied by rising volumes, whilst the uptrend formation was also re established. Price targets are located around RM0.73-0.75 with long term target at RM0.835. Support is pegged at RM0.60 and cut loss is located at RM0.595.

Source: Mplus Research - 3 Aug 2020