Good morning.
Today, we feature a note on Samchem Holdings Berhad in our FundTech Radar – 5th June 2018. The company is a leading industrial chemical distributor in Malaysia and South East Asia. Samchem represents the largest petrochemical companies in the business today - ExxonMibil Chemical, Shell, Petronas, and BASF.
Fundamental Stance
· A healthy 3-year (FYE15-17) revenue and core PATAMI CAGR of 14.1% and 40.8% respectively.
· However, its business operates on a fairly thin core PATAMI margin of about 2% on average
· Net gearing ratio rose to 1.11x as at 1Q18 (vs. 1.02x in 4Q17)
· Both FY17 dividend yield and payout declined to 2.9% and 40.2% respectively.
· The proposed listing of its 63.25%-owned Samchem Sphere Joint Stock Company on Ho Chi Minh City Stock Exchange will raise funds for its future expansion.
· There is room to grow for Samchem’s business in ASEAN as it expects to start full operations in Myanmar and Philippines by 2Q2018.
· Rising crude prices is likely to drive up the cost of petrochemicals that Samchem imports.
· Currently trading at 12.3x 12-month trailing P/E, a 13% discount compared to its peer.
Technical Front
Trend is up but rising wedge pattern is currently taking form.
Resistances: 1.27/1.35/1.50
Supports: 0.89/0.72/0.60
The above information is extracted from CIMB Research Report. For the full research reports, outlook and disclaimers, please logon to your account on www.itradecimb.com.my and click on <Research> Tab under Malaysia.
This FundTech Radar report is intended for educational purposes only. It represents a preliminary assessment of the subject company, and does not represent initiation into CIMB's coverage universe. It does not carry investment ratings and CIMB does not commit to regular updates on an ongoing basis.
5th June 2018
Disclaimers: This distribution is by CIMB Investment Bank Berhad (“CIMB”) in Malaysia only. The views are our own as of this date and subject to change. No further distribution is allowed without our prior written consent. CIMB, its related corporations, affiliates and business partners make no recommendation, offer or invitation to transact in any securities, futures contracts or other instruments. Please make your independent evaluation, consider your own investment objectives and financial situation and consult your own professional advisers before participating in any transaction.
