April 17, 2020 By Calvin Tan Smart Investment


1)   What is Luxchem’s core business?
Luxchem core business is the supply of industrial chemicals. It has over 400 types of chemicals and 100 grades which it exports to a total of 12 countries.  Its large established customer base of over 700 provides the company considerable synergies to sustain and grow the business. Luxchem has been manufacturing unsaturated polyester resin and gelcoat since 1998 and is a local market leader in supplying unsaturated polyester resin (UPR).

2)   What is the par value of each share, issue price and the present amount of outstanding shares?
RM 0.50 is the par value, issue price is RM1.10 and at present the outstanding number of shares stands at 130 million.

3)   What is Luxchem’s fiscal year end?
31 December.

4)   Is Luxchem a proxy for the rubber glove industry?
Currently around 20% of its revenue comes from the sale of synthetic latex (nitrile) and related chemical products to the top players like Kossan Rubber, Top Gloves, Supermax, Riverstone and Hartalega. Luxchem sources its nitrile from Zeon Chemicals of Japan which is a leading developer and supplier of innovative polymers, including synthetic elastomers and speciality chemicals. Luxchem has an established dealing relationship with Zeon Chemicals for over 20 years therefore an assurance of continuity.

5)   Who are the major shareholders?
Mr Tang Ying See and his wife Madam Chin Song Mooi collectively own 51% of the paid-up capital (directly & indirectly) in the company.

6)   What is the outlook for the Industry?
Although Luxchem specializes in industrial chemicals, its products are broadly diversified into four different segments of industry usage :- latex, rubber, pvc and fiberglass reinforced plastic (FRP). The company expects an overall growth of 10-15% for the year 2011.

7)   What is Luxchem’s expansion plan?
Luxchem currently has 4 offices and warehouses in Penang, Port Klang, Ipoh & Johor and a sales and marketing office in Singapore. It has just incorporated a subsidiary in Indonesia. It is in the plans to set up a representative office in Vietnam to improve their services to customers in the region through a diversified product range.

8)   What is the dividend payout ratio?
Luxchem is in a strong financial position with net cash of RM76.64m as at Dec 31 2010. Luxchem paid out a total dividend of 8 sen in FY2010. This represents a dividend yield of 7.62% at market price of RM1.05 (31 Dec 2010). LCB, with dividend paid out amounting to 36% of PAT in FY2008, 48% of PAT in FY2009 and 51% of PAT in FY2010, represents a generous trend in dividend payout. For FY2011, the Management has announced an interim dividend of 3 sen per share. Management is of the view that this trend is likely to continue as capacity expansion expenses have already been provided for and there are no large cash outflow expected.

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