PETALING JAYA: Chemical manufacturer and supplier TMK Chemical Bhd
’s earnings momentum is expected to remain robust through the second half of the financial year ending Dec 31, 2026 (FY26), says TA Research.
The company released second quarter ended June 30, 2026 (2Q26) earnings that were broadly in line with market expectations.
It also declared an interim dividend of 3.6 sen per share, implying a payout ratio of 51%.
The research house said the momentum would be underpinned by resilient sales volume and firm chlor-alkali average selling prices (ASPs).
“Management indicated that 3Q26 volume remained strong during the July to August period, while ASPs are expected to remain broadly flat quarter-on-quarter, with hydrochloric acid prices holding at around RM750 per tonne,” it shared, adding that demand from the semiconductor, petrochemical, utilities and data-centre industries should provide further support.
It noted that the acquisition of Chemical Company of Malaysia Bhd (CCM) from Batu Kawan Bhd could contribute RM67mil to the company’s core net profit once fully integrated.
“Hence, we raise our FY27 to FY28 earnings estimates by 38.3% and 36.2% respectively, to incorporate CCM’s contribution upon completion of the acquisition,” it said.
It pointed out that the CCM acquisition remains on track for a sale-and-purchase agreement to be signed by mid-September 2026, with an expected annual profit before tax contribution of RM80mil to RM90mil.
“Synergies from scale, procurement, logistics and plant debottlenecking should further improve margins and shift TMK’s earnings mix towards higher-margin manufacturing. Upon completion, TMK’s chlor-alkali market share is expected to rise to approximately 85%,” it further added.
It said the expansion of the company’s Banting chlor-alkali plant in Banting remains on track for commissioning in 1Q27, with utilisation expected to ramp up towards 80% or above in the second half of next year.
Following the earnings revisions, it has maintained a “buy” call on the stock but raised the target price to RM3.48, believing that the company’s dominant position in the domestic chlor-alkali market warrants the premium valuation, supported by the stronger earnings growth profile from the CCM acquisition and additional capacity from the Banting plant.
“The enlarged scale and expected improvement in earnings mix should also support a higher-quality and more resilient earnings profile,” it said.
