• Maintain HOLD (TP: RM0.98) Hextar Global Bhd (HGB)’s 1HFY24 core PATAMI of RM32.3mn (+55% YoY) was within our in-house estimates but substantially below consensus expectations, accounting 49% and 44% of the full year forecast respectively. The group declared a first interim singletier DPS of 0.5sen amounting RM19.4mn for FY24. We make no changes on the FY24-26F earnings forecast. We maintain our positive outlook on HGB's long-term prospects, underpinned by its solid position in the agrochemical sector, robust growth potential in Specialty Chemicals, and strategic entry into the Fruit segment. These drivers are anticipated to support sustained earnings growth, reinforcing HGB's ability to deliver consistent performance in the coming years. Maintain a HOLD call with an unchanged TP of RM0.98 based on sum-of-part (SOP) methodology.
• Key highlights. 2QFY24 revenue of RM213mn slipped by 8% QoQ but jumped 60% YoY. Meanwhile, PBT surged by 66% QoQ and 102% YoY, driven by strong earnings from both the Agrochemical and Specialty Chemical segments. For 1HFY24, revenue and PBT improved by 64% YoY and 67% YoY respectively, due to better contributions from Specialty Chemicals, where revenue grew by 90% as well as the new contribution from the Fruit segment.
• Dividend. The group declared a first interim single-tier DPS of 0.5sen amounting RM19.4mn for FY24. This make up 25% of our FY24F DPS assumption of 2sen.
• Forecast. Unchanged.
• Outlook. We hold a positive view of HGB's long-term outlook, driven by its strong foothold in the domestic agrochemical market and significant growth opportunities within its Specialty Chemicals segment. The strategic acquisition of PHG Ever Fresh Group and the expansion into the Fruit segment, particularly given the rising demand for durians across Asia, are poised to further enhance earnings. We believe these factors will significantly contribute to sustained earnings growth in the long term.

Source: BIMB Securities Research - 20 Aug 2024