Monday, February 22, 2010

Luxchem, Another Gem In The Making


The principal activities of Luxchem are manufacturing and trading of unsaturated polyester resin and related products, import and distribution of chemical and pertochemical products. It is principally an investment holding company
with two subsidiaries - Luxchem Polymer Industries Sdn Bhd and Luxchem Trading Sdn Bhd. Three of Luxchem’s subsidiaries are ISO9001:2000 certified. This provides quality assurance to Luxchem’s customers.

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The industrial chemical supplier and unsaturated polyester resin (UPR) manufacturer currently it has seven distribution and marketing centers, of which six are in Peninsular Malaysia and one in Singapore. Luxchem supplies over 400 types of industrial chemicals (basic industrial chemicals, plastic in primary forms and synthetic rubber including UPR) to some 800 customers from industries that use rubber and plastics in the production process. The large client base limits Luxchem’s customer & industry specific risks and provides Luxchem strong bargaining power. Luxchem’s customers are spread out into 10 different manufacturing industries. The diversity enables Luxchem to mitigate risks arising from a particular industry while still exposing itself to any of the industries’ growth.

The Group produces Malaysia's most comprehensive portfolio of unsaturated polyester resins under the brand name POLYMAL. Luxchem is a convenient one stop supply centre that supplies 400 types of chemicals and 100 different grades and types of UPR. Luxchem is currently focusing on its UPR segment. It has a wide number of applications and is a potential growth area. Moreover, this segment has a high barrier to entry due to the high capital investment and level of technology required.Today, LCB exports to Thailand, Singapore, Indonesia, Vietnam, Philippines, China, Australia and the Middle East.




SUMMARY OF KEY FINANCIAL INFORMATION
31/12/2009

INDIVIDUAL PERIOD
CUMULATIVE PERIOD
CURRENT YEAR QUARTER
PRECEDING YEAR
CORRESPONDING
QUARTER
CURRENT YEAR TO DATE
PRECEDING YEAR
CORRESPONDING
PERIOD
31/12/2009
31/12/2008
31/12/2009
31/12/2008
$'000$'000$'000$'000
1Revenue 83,66073,000305,308331,615
2Profit/(loss) before tax 6,9293,49025,52123,580
3Profit/(loss) for the period5,1012,73218,97117,973
4Profit/(loss) attributable to ordinary equity holders of the parent5,1012,73218,97117,973
5Basic earnings/(loss) per share (Subunit) 3.903.3014.6015.00
6Proposed/Declared dividend per share (Subunit)5.005.007.005.00








AS AT END OF CURRENT QUARTER
AS AT PRECEDING FINANCIAL YEAR END
7
Net assets per share attributable to ordinary equity holders of the parent ($$)0.79000.7100


The company registered excellent results for 2009 with a net profit of RM18.9m or a net EPS of 14.6 sen. Luxchem has also declared a total of 7 sen dividend for 2009. At RM1.03, the stock trades at a ridiculous 7x 2009. It pays very good dividends, what more you want.

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NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

1 comment:

asdf1234 said...

Hi Dali,

I'm a regular reader of your blog and I take your views and comments with great interest.

I've taken a look at Luxchem and I like what I see. However, I've noticed that for FY2009, the 5.6% increase in Net Profit did not correspond with a whopping 66% decrease in operating cash flow in the cash flow statement. This apparently was due to an influx of trade receivables and inventories.

Is this a cause for concern? I remember Transmile showing the same sort of numbers before the shit hit the fan. Thanks!