Texchem Resources Bhd (KLSE:TEXCHEM) - Share price, News & Analysis

Q: What is the Fair Price of TEXCHEM when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

TEXCHEM (MYR2.96) is trading below our estimate of [[fair value]] (MYR3.69)

TEXCHEM fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	3/6
Past Performance	4/6
Financial Health	6/6
Dividends	3/6

TEXCHEM Stock Overview

Texchem Resources Bhd, an investment holding company, engages in industrial, polymer engineering, food, restaurant, and venture businesses.

Rewards

Trading at 19.8% below our estimate of its fair value

Earnings are forecast to grow 15.67% per year

Earnings grew by 184.3% over the past year

Risk Analysis

Unstable dividend track record

Volatile share price over the past 3 months

Large one-off items impacting financial results

Does not have a meaningful market cap (MYR350M)

Texchem Resources Bhd Competitors

Kumpulan Fima Berhad

KLSE:KFIMA

RM615.7m

Boustead Holdings Berhad

KLSE:BSTEAD

RM1.6b

Hong Leong Industries Berhad

KLSE:HLIND

RM2.9b

Sunway Berhad

KLSE:SUNWAY

RM8.1b

Price History & Performance

Summary of all time highs, changes and price drops for Texchem Resources Bhd
Historical stock prices
Current Share Price	RM2.96
52 Week High	RM3.99
52 Week Low	RM0.71
Beta	1.25
1 Month Change	6.86%
3 Month Change	6.09%
1 Year Change	246.20%
3 Year Change	474.76%
5 Year Change	171.56%
Change since IPO	81.70%

Recent News & Updates

Jul 22

Texchem Resources Bhd (KLSE:TEXCHEM) Has Some Way To Go To Become A Multi-Bagger

If you're looking for a multi-bagger, there's a few things to keep an eye out for. In a perfect world, we'd like to see...

Shareholder Returns

	TEXCHEM	MY Industrials	MY Market
7D	-0.3%	-0.2%	0.5%
1Y	246.2%	2.3%	-3.1%

Return vs Industry: TEXCHEM exceeded the MY Industrials industry which returned 2.3% over the past year.

Return vs Market: TEXCHEM exceeded the MY Market which returned -3.1% over the past year.

Price Volatility

Is TEXCHEM's price volatile compared to industry and market?
TEXCHEM volatility
TEXCHEM Average Weekly Movement	10.3%
Industrials Industry Average Movement	4.5%
Market Average Movement	5.6%
10% most volatile stocks in MY Market	11.5%
10% least volatile stocks in MY Market	2.8%

Stable Share Price: TEXCHEM is more volatile than 75% of MY stocks over the past 3 months, typically moving +/- 10% a week.

Volatility Over Time: TEXCHEM's weekly volatility (10%) has been stable over the past year, but is still higher than 75% of MY stocks.

About the Company

Founded	Employees	CEO	Website
1973	2,799	Kee Yap	https://texchemgroup.com

Texchem Resources Bhd, an investment holding company, engages in industrial, polymer engineering, food, restaurant, and venture businesses. The company offers plastic resins, rubber/latex chemicals, PVC and coating/ink resins and additives, adhesive chemicals, food ingredients, personal care and pharmaceutical additives, dyestuffs and textile auxiliaries, hand sanitizers and surface disinfectants, 3-ply face masks, and face shields. It also provides polymer solutions and designs to the data storage, semiconductor, consumer electronics and electrical, telecommunications, and medical devices/life science industries.

Texchem Resources Bhd Fundamentals Summary

How do Texchem Resources Bhd's earnings and revenue compare to its market cap?
TEXCHEM fundamental statistics
Market Cap	RM350.21m
Earnings (TTM)	RM31.86m
Revenue (TTM)	RM1.13b

11.0x

P/E Ratio

0.3x

P/S Ratio

Is TEXCHEM overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
TEXCHEM income statement (TTM)
Revenue	RM1.13b
Cost of Revenue	RM886.90m
Gross Profit	RM241.13m
Other Expenses	RM209.27m
Earnings	RM31.86m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.27
Gross Margin	21.38%
Net Profit Margin	2.82%
Debt/Equity Ratio	52.0%

How did TEXCHEM perform over the long term?

See historical performance and comparison

Dividends

3.4%

Current Dividend Yield

38%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is TEXCHEM undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for TEXCHEM?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for TEXCHEM. This is calculated by dividing TEXCHEM's market cap by their current preferred multiple.
What is TEXCHEM's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	RM350.21m

TEXCHEM key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.5x
Enterprise Value/EBITDA	9.3x
PEG Ratio	0.7x

Price to Earnings Ratio vs Peers

How does TEXCHEM's PE Ratio compare to its peers?

TEXCHEM PE Ratio vs Peers

The above table shows the PE ratio for TEXCHEM vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	11.7x
KFIMA Kumpulan Fima Berhad	6x	n/a	RM615.7m
BSTEAD Boustead Holdings Berhad	3.8x	n/a	RM1.6b
HLIND Hong Leong Industries Berhad	16.2x	n/a	RM2.9b
SUNWAY Sunway Berhad	20.9x	15.3%	RM8.1b
TEXCHEM Texchem Resources Bhd	11x	15.7%	RM350.2m

Price-To-Earnings vs Peers: TEXCHEM is good value based on its Price-To-Earnings Ratio (11x) compared to the peer average (11.7x).

Price to Earnings Ratio vs Industry

How does TEXCHEM's PE Ratio compare vs other companies in the Asian Industrials Industry?

Price-To-Earnings vs Industry: TEXCHEM is good value based on its Price-To-Earnings Ratio (11x) compared to the MY Industrials industry average (15.4x)

Price to Earnings Ratio vs Fair Ratio

What is TEXCHEM's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

TEXCHEM PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	11x
Fair PE Ratio	16.4x

Price-To-Earnings vs Fair Ratio: TEXCHEM is good value based on its Price-To-Earnings Ratio (11x) compared to the estimated Fair Price-To-Earnings Ratio (16.4x).

Share Price vs Fair Value

What is the Fair Price of TEXCHEM when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: TEXCHEM (MYR2.96) is trading below our estimate of fair value (MYR3.69)

Significantly Below Fair Value: TEXCHEM is trading below fair value, but not by a significant amount.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Insufficient data to show price forecast.

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Future Growth

How is Texchem Resources Bhd forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

Future Growth Score

3/6

Future Growth Score 3/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

15.7%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: TEXCHEM's forecast earnings growth (15.7% per year) is above the savings rate (3.6%).

Earnings vs Market: TEXCHEM's earnings (15.7% per year) are forecast to grow faster than the MY market (10.2% per year).

High Growth Earnings: TEXCHEM's earnings are forecast to grow, but not significantly.

Revenue vs Market: TEXCHEM's revenue (5.5% per year) is forecast to grow faster than the MY market (5.1% per year).

High Growth Revenue: TEXCHEM's revenue (5.5% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: TEXCHEM's Return on Equity is forecast to be low in 3 years time (15.6%).

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Past Performance

How has Texchem Resources Bhd performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

39.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: TEXCHEM has a large one-off gain of MYR6.8M impacting its March 31 2022 financial results.

Growing Profit Margin: TEXCHEM's current net profit margins (2.8%) are higher than last year (1.1%).

Past Earnings Growth Analysis

Earnings Trend: TEXCHEM's earnings have grown significantly by 39.8% per year over the past 5 years.

Accelerating Growth: TEXCHEM's earnings growth over the past year (184.3%) exceeds its 5-year average (39.8% per year).

Earnings vs Industry: TEXCHEM earnings growth over the past year (184.3%) exceeded the Industrials industry 26.2%.

Return on Equity

High ROE: TEXCHEM's Return on Equity (10.7%) is considered low.

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Financial Health

How is Texchem Resources Bhd's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: TEXCHEM's short term assets (MYR398.2M) exceed its short term liabilities (MYR321.3M).

Long Term Liabilities: TEXCHEM's short term assets (MYR398.2M) exceed its long term liabilities (MYR155.2M).

Debt to Equity History and Analysis

Debt Level: TEXCHEM's net debt to equity ratio (19.8%) is considered satisfactory.

Reducing Debt: TEXCHEM's debt to equity ratio has reduced from 52.7% to 52% over the past 5 years.

Debt Coverage: TEXCHEM's debt is well covered by operating cash flow (33.4%).

Interest Coverage: TEXCHEM's interest payments on its debt are well covered by EBIT (4.2x coverage).

Balance Sheet

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Dividend

What is Texchem Resources Bhd current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

3.38%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: TEXCHEM's dividend (3.38%) is higher than the bottom 25% of dividend payers in the MY market (2%).

High Dividend: TEXCHEM's dividend (3.38%) is low compared to the top 25% of dividend payers in the MY market (4.84%).

Stability and Growth of Payments

Stable Dividend: TEXCHEM has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: TEXCHEM has only been paying a dividend for 7 years, and since then payments have fallen.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (37.7%), TEXCHEM's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (29%), TEXCHEM's dividend payments are well covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

2.3yrs

Average management tenure

CEO

Kee Yap (58 yo)

4.42yrs

Tenure

RM777,000

Compensation

Mr. Kee Keong Yap has been President and Chief Operating Officer of Texchem-Pack (M) Bhd., a subsidiary of Texchem Resources Bhd since 2005. Mr. Yap has been the Chief Executive Officer of Texchem-Pack Hol...

CEO Compensation Analysis

Compensation vs Market: Kee's total compensation ($USD174.44K) is above average for companies of similar size in the MY market ($USD111.82K).

Compensation vs Earnings: Kee's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: TEXCHEM's management team is considered experienced (2.3 years average tenure).

Board Members

Experienced Board: TEXCHEM's board of directors are seasoned and experienced ( 10.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/07 00:00
End of Day Share Price	2022/08/05 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31