1H18 Pretax Profit Grew by 108.3%, Excluding Non-recurring Items

• Megachem reported a strong set of results for 1H18 with revenue growing by 14.8% year-on-year from S$51.4m in 1H17 to S$59.0m in 1H18.
• Gross profit margin continued to expand to 25.3% in 1H18 compared to 25.0% in 2H17 and 24.2% in 1H17. The improvement in gross margin was due to the absence of inventory write down in 1H18 and lower manufacturing overheads as the plant and machinery used in contract manufacturing was almost fully depreciated by the end of 1H17.
• Excluding the impairment of receivables and fair value items, profit before tax grew by 108.3% from S$1.6m in 1H17 to S$3.3m in 1H18.

Indo-China Market to Drive Growth

Following its listing, 36% owned associated company Megachem (Thailand) Public Company Limited has acquired 80% of a chemical distributor C.M.J Anchor Co., Ltd for THB124m (or about S$5m). CMJ imports and distributes ethanol to various customers in the spray, perfume and cosmetic industries in Thailand.

In July, Megachem Thailand has also incorporated a 51% owned joint venture Megachem (Myanmar) Limited.

Source: Tayrona Financial Research - 14 Aug 2018