At 56.5 sen, the counter was trading at its highest since March 2021 with more than 17 million shares changing hands.
PETALING JAYA: Adhesive maker Techbond Group Bhd
, which saw the emergence of PPB Group Bhd as its substantial shareholder last Friday, rallied by as much as 30% to 56.5 sen in the morning trading session yesterday.
At 56.5 sen, the counter was trading at its highest since March 2021 with more than 17 million shares changing hands after the conglomerate bought a 15% stake in Techbond.
It closed at 52 sen yesterday after profit-taking activities.
On June 14, PPB, which is controlled by Malaysia’s richest tycoon, Robert Kuok, said it acquired a 15% stake in Techbond.
It bought over 82.9 million shares and over 34 million unexercised warrants in Techbond from Sonicbond Sdn Bhd via a direct business transaction for RM37.67mil.
The shareholding will remain the same, PPB said, if it exercises all its warrants and assuming all other warrants are also exercised, but its total consideration for the acquisition will increase to RM48.9mil.
The shareholding of Sonicbond, which is the private vehicle of Techbond managing director Lee Seng Thye, will reduce to 54.39% after the disposal of the shares to PPB.
Kenanga Research is positive on the deal as PPB is getting a good deal because it is earnings accretive and the 15% stake is acquired at below its target price per share of 50 sen for Techbond.
“While Techbond is much smaller than benchmarked peers, we believe the price earnings ratio valuation is justified given the specialised nature of its business and exposure to niche markets that have less competition.
“On the other hand, Techbond is getting a strong strategic partner with extensive regional operations including strong presence in China and India as well as a global network.
“PPB could easily fund the acquisition with its net cash of RM734mil. We see the deal as more of a vote of confidence from PPB to Techbond,” the research house added.
Kenanga Research pointed out that Techbond’s acquisition of MAC has expanded its wood-based coverage from furniture-maker to timber panels such as chipboards.
It added that 70% of Techbond’s revenue is derived from exports to over 30 countries in Asia-Pacific, Europe, and Africa.
“While it started off serving the wood-based sector, it is now increasingly supplying to players in the fast-moving consumer goods space such as water-resistant sticky labels for beverage bottles, adhesives for cigarettes boxes as well as carton packaging solution to replace plastic straps.”
The research house said Techbond’s strength lies in its focus as an industrial adhesives and sealants solution provider.
