• Maintain HOLD (TP: RM0.79) Hextar Global Bhd (HGB)’s FY23 core PATAMI of RM56mn was above ours and consensus expectations, accounting for 120% and 112% of the full-year forecast, respectively. The higher-thanexpected earnings was underpinned by stellar growth in the Specialty Chemicals segment and a contribution from the newly acquired durian processing business. The Group declared an interim single-tier dividend of 1.0sen/share which translate into 1.1% dividend yield at current share price. We make no changes on FY24-25F pending management meeting on March 2024. We maintain an optimistic outlook on the long-term prospects of HGB, given its robust standing within the domestic agrochemical sector and the anticipated favourable growth trajectory for the Specialty Chemicals segment. Maintain a HOLD call with a new Target Price of RM0.79 (RM0.72 previously) based on sum-of-part (SOP) methodology.

• Key highlights. 4Q23 revenue and PBT showed a significant growth, increasing by 17% QoQ and 55% QoQ respectively. This performance can be attributed to the robust performance of the Specialty Chemical segment revenue, which increase 3% QoQ. In addition, the Fruits segment made a noteworthy contribution during this quarter, with revenue and PBT reaching RM52mn and RM12mn respectively.

• Outlook. We hold a positive outlook for HGB's long-term prospects, supported by its strong position in the domestic agrochemical sector and the promising growth potential in the Specialty Chemicals segment. The strategic move to diversify the earnings base through the acquisition of PHG Ever Fresh Group is expected to enhance group earnings, particularly with the favorable outlook and increasing demand for durian in the Asia region. We believe that these factors will collectively contribute significantly to fostering sustained earnings growth for the company.

Source: BIMB Securities Research - 20 Feb 2024