TMK Chemical Bhd - Total Chemical Management & Storage Expert

Date: 
2024-11-29
Firm: 
PUBLIC BANK
Stock: 
Price Target: 
2.051
Price Call: 
HOLD
Last Price: 
Upside/Downside: 
+2.051 (∞%)

TMK Chemical Bhd (TMK) specialises in total chemical management, including sourcing, processing and distributing inorganic chemicals such as acids, alkalis, salts and chlor-alkali derivatives. The Group also provides chemical terminal services, including bulk storage and logistics, through facilities in Malaysia, Singapore and Vietnam, as well as liquid bulk terminals in Malaysia. In May 2024, TMK began manufacturing chlor-alkali derivatives (e.g. sodium hydroxide, chlorine and hydrochloric acid) at its Banting Plant 1, with an annual capacity of 37,000 ECU. TMK serves a diverse industrial customer base, offering value-added services like custom chemical processing, quality control and logistics through its in-house fleet and third-party partners to support delivery and storage needs.

TMK plans to double chlor-alkali production capacity with Banting Plant 2 by 2026 and expand its chemical management facilities in Malaysia and Singapore by 1QFY27. Besides that, the Group aims to grow through acquisitions, targeting synergies and regional presence in Asia Pacific. Moreover, TMK will enhance product offerings, including hydrogen peroxide and poly aluminium chloride, and expand chemical terminal services. In addition, its regional expansion includes facility upgrades in Vietnam and potential entry into Indonesia via acquisitions or new establishments. We derive a fair value of RM2.05 based on a 15.5x PE multiple to its FY25F EPS of 13.4sen. The IPO is expected to raise approximately RM385.0m from the issuance of 220.0m new shares. Besides utilising 12.9% proceeds to construct a new facility in Singapore, 25.7% and 23.4% of the proceeds are allocated for potential acquisition and expansion of its Banting Plant 1, respectively.

  • Growth drivers. TMK's growth will be driven by: i) construction of a new chlor- alkali manufacturing plant, ii) construction of a new facilities for total chemical management, iii) pursuit of acquisitions and investments in other companies, iv) continued development and growth of its product and service offerings, as well as v) regional expansion.
  • Competitive strengths. TMK's competitive strengths include: i) proven track record, ii) an extensive range of chemicals with a broad customer base, iii) provision of end-to-end solutions, iv) regional market footprint, and v) experienced and long serving management team.
  • Catalysts. Key drivers may include: i) demand for goods and industrial applications, of which inorganic chemicals are key components, as well as ii) economic growth and growth in the manufacturing sector.
  • Key risks. Key downside risks, among others, include: i) competition, ii) price volatility, availability and quality of inorganic chemicals and raw materials, iii) reliance on a few major suppliers, iv) foreign exchange fluctuation, and v) dependence on licences, permits and regulatory approvals.

Source: PublicInvest Research - 29 Nov 2024

Discussions
Be the first to like this. Showing 0 of 0 comments

Post a Comment