Apex Securities Research expects Seng Fong to post a net profit of RM72.2mil for FY25, up from the record RM57.3mil achieved in FY24.
PETALING JAYA: Rubber processing company Seng Fong Holdings Bhd
, which recently posted a record annual profit for its financial year ended June 30, 2024 (FY24), is poised to achieve a 26% increase in its bottom line for FY25, according to Apex Securities Research.
The research house expects Seng Fong to post a net profit of RM72.2mil for FY25, up from the record RM57.3mil achieved in FY24.
Seng Fong primarily processes raw rubber into intermediate blocks for sale to manufacturers such as tyre makers.
Apex Securities also anticipates Seng Fong will gradually ramp up its annual capacity to 200,000 tonnes in FY25 and further to 210,000 tonnes in FY26.
“Growth will be driven by enhanced operational efficiency through the addition of more working shifts and the implementation of Smart Rubber manufacturing equipment across all three of its plants.
Additionally, the full utilisation of a biomass system and the integration of smart equipment into operations are expected to contribute to margin expansion through overhead and cost savings,” it noted.
As of end-FY24, Seng Fong’s utilisation rate remained robust at 95% of its annual capacity of 190,000 tonnes.
On the industry outlook, Apex Securities said, Malaysia’s natural rubber export volume increased by 14% year-on-year (y-o-y) in the first half of 2024, fuelled by a resurgence in manufacturing activity in China and growing demand in India.
“Future growth will be fuelled by the rise in vehicle production and the development of electric vehicles globally,” it added.
For the fourth quarter of FY24, Seng Fong reported a core net profit of RM16.5mil, marking a y-o-y increase of 454.1% and an 8.9% quarter-on-quarter (q-o-q) rise.
Revenue for the quarter surged by 38.7% y-o-y and 10.3% q-o-q to RM331.3mil.
Full-year FY24 core net profit of RM57.3mil met 101% of Apex Securities’ forecast, while revenue exceeded expectations, coming in at 103% of the projection.
Apex Securities has maintained its earnings forecast for Seng Fong as the reported figures aligned with expectations.
The research house reiterated its “buy” call with an unchanged target price of RM1.90, based on a 19 times price-earnings ratio on FY26 earnings per share.
