KUALA LUMPUR: Rakuten Trade Sdn Bhd forecasts TMK Chemical Bhd's net earnings to range between RM117.2 million and RM132.3 million for the financial years 2024 to 2026 (FY24–FY26).
The firm remain cautious about TMK's high net gearing, which stood at 1.6x as of the first half of FY24.
However, with 13 per cent of the initial public offering (IPO) proceeds earmarked for reducing bank borrowings, along with an increase in shareholders' equity and stronger projected earnings in FY24, Rakuten expect net gearing to decline to about 0.4x by the end of FY24.
Rakuten Trade noted that the company maintains a dividend policy with a payout ratio of 30 to 50 percent.
For the financial years 2024 to 2026 (FY24 to FY26), a payout ratio of 40 per cent is anticipated, which would translate into dividend yields ranging from 2.7 to 3.0 per cent.
"The global chemical industry is set for steady growth, fuelled by rising demand from key sectors like construction, healthcare, and agriculture.
"Sustained demand for inorganic chemicals and Southeast Asia's industrial growth, backed by supportive policies, create a favourable environment for TMK Chemical's expansion," it said.
The company aims to leverage its expanded manufacturing and processing capabilities to reduce reliance on third-party suppliers and strengthen its value chain.
"Also, the company plans to explore advanced digitisation and automation initiatives to improve operational efficiency.
"TMK also seeks to expand its customer base and geographical footprint through targeted marketing and partnerships in high-demand regions," it added.