KUALA LUMPUR: Hextar Global Bhd is reaping the rewards of recent acquisitions, as indicated by the surge in operating and pre-tax profits, according to Public Investment Bank (PublicInvest).
The firm attributes the improved quarterly results to a return to normalcy in the latter half of 2023 (2H2023).
PublicInvest has revised its forecasts for Hextar Global's financial years 2024 and 2025 (FY24 and FY25) upwards by 35 per cent.
This adjustment is attributed to higher sales in the specialty chemicals and agriculture sectors, coupled with improved operating margins, it said.
In the fourth quarter of the financial year 2023 (4QFY23), Hextar Global reported a net profit of RM23.4 million. This growth was fueled by advancements in its specialty chemical division and contributions from its newly integrated fruit segment.
PublicInvest said the revenue from the agriculture segment witnessed a 9.4 per cent year-on-year (YoY) increase to RM83.2 million in 4QFY23, primarily due to more favorable selling prices for herbicide products.
It said that going forward, the management foresees continued market leadership in the agrochemicals sector, driven by increasing demand.
Additionally, the specialty chemicals segment experienced a 35 per cent YoY revenue increase to RM78.7 million in 4QFY23, propelled by expanded operations in the oil and gas chemicals cleaning sector.
PublicInvest maintains a positive outlook for the oil and gas industry, particularly in specialty chemicals and catalysts, for 2024.
However, it cautioned against short-term volatility in special derivatives and coating chemicals used in the rubber glove industry due to oversupply conditions.
It said that Hextar Global's diversification away from industrial and specialty chemicals volatility, marked by its acquisition of various companies through the 51 per cent-owned Hextar Fruits in 2023 for RM84 million in cash, is noteworthy.
PublicInvest maintains a 'neutral' rating on Hextar Global, citing limited potential for share price appreciation, but has raised the target price to 90 sen from the previous 63 sen.