Research house maintains ‘buy’ call on Luxchem

What traits do you look for in your talent or how do you decide who is right for a job?

Among the most important qualities are having the right mindset and the willingness to learn. Of course, the right skill set for the job is important, but skills alone do not guarantee one’s ability to perform or excel at the job.

It is important that the talent, whether at entry level or senior management, has an inquisitive mind and is eager to make the most out of every opportunity that comes their way. They must see the opportunity in every challenge and have the passion for the work PETALING JAYA: AmInvestment Bank research reiterated a “buy” call on Luxchem Corp Bhd with a lower fair value of RM0.81 per share (previously RM0.84/share), on expectations of better earnings in the second half of the year.

The research house said it expects a better latter half of the year as the first half was impacted by fewer working days in Malaysia and Indonesia due to Hari Raya falling in Q2, and the uncertainties in the local market after the 14th general elections

“We continue to like Luxchem due to its: 1) exposure to industries with stable and commendable

What advice can you offer those looking to start their career/own business? There are no limits to one’s dreams. You must always dream big, and do not be afraid of failure. One of the toughest periods of my life was in 1986 when I was sitting for my Lower Certificate Examinations (SRP). I failed my Bahasa Malaysia paper, which basically meant I had failed the whole exam and had to repeat my Form 3. Around that time, my paternal grandmother also passed away, my father lost his job and my family was asked to evict our rented house. I felt that I had hit rock bottom and was ready to give up. But it was my father who helped me to see the light at the end of the tunnel. He emptied our family savings of RM50,000 – a huge sum in those days – and offered me a growth such as the glove sector (latex); 2) good earnings visibility backed by large clientele (~1,000 customers) and wide applications of its chemical products; and 3) capacity expansion in the group’s manufacturing arms, Luxchem Polymer Industries (LPI), and Transform Master Sdn Bhd,” it said.

Lower export sales were seen in Indonesia, Vietnam and Thailand, due to weaker sales in the manufacturing segment and the headwinds faced by Luxchem’s unsaturated polyester resin manufacturing arm LPI, which continues to operate in a highly competitive environment.

Filling up to 60-70% of its capacity, LPI continues to push to fill up its new capacity of 10K metric tons a year (MT/year) after facing increased competition coupled with a slower market.

Its manufacturing arm TMSB, however, is running at ~80% capacity and the group plans to further expand capacity from 13.8K MT/year to 20K MT/year in the next few years, indicating a sturdy demand of latex and latex-related chemicals from the glove sector.

This is seen as positive given that Luxchem is one of the key suppliers to the glove sector, which also remains as its main growth driver for FY18F.

The research house has also trimmed its FY18F-FY20F earnings forecast by 2-5% due to continued stiff competition in the unsaturated polyester resin industry and an expected slowdown in its Indonesian segment.

“Luxchem’s 2QFY18 core net profit came in slightly below expectations at RM10.0 million (QoQ: +1%, YoY: +10%). This brings 1HFY18 core net profit to RM19.8 million, which accounts for 45% of our fullyear forecast and 44% of consensus estimates,” it said.