KUALA LUMPUR (July 25): Texchem Resources Bhd (KL:TEXCHEM), a diversified company with interests ranging from engineering to restaurants, is expected to see improved earnings in the second half of 2025.
This optimistic outlook, despite weaker first-half results, is driven by an anticipated recovery in its polymer engineering segment and strategic initiatives within its restaurant division, according to RHB Investment Bank Bhd (RHB IB).
RHB IB anticipates Texchem's polymer engineering segment to benefit from the ongoing recovery in the hard disk drive and semiconductor industries, along with continued growth from medical life science customers. "Several new high-margin projects are gaining traction, and more are in the pipeline, supporting margin improvements and operating leverage, in our view," it said in a research note Thursday.
For the restaurant division, which operates popular chains like Sushi King, Miraku, and Hoshino Coffee, the group plans to refresh its menu and expand into suburban locations, which typically yield stronger margins, RHB IB observed.
Furthermore, a strong Malaysian ringgit is expected to alleviate input cost pressures across all segments. The food division has also diversified its supply chain to Thailand since FY2024 to manage the impact of foreign exchange controls, with management hopeful for the gradual easing of those restrictions.
Texchem's core earnings for the first half of fiscal year 2025 (1HFY2025), which ended on June 30, 2025, stood at RM4.30 million. This figure met only 26% of RHB IB's full-year forecast. "The shortfall was mainly on softer-than-expected performances in the industrial and food divisions," RHB IB noted.
Still, RHB IB, the sole research house covering Texchem, is maintaining its "buy" call on the stock, albeit at a lower target price of RM1.37, compared with RM1.58 previously. The firm also cut Texchem's earnings forecast for FY2025 by 14%, and for FY2026–27 by 5% each. These revisions reflect lower expected margins in the industrial and food divisions.
Shares in Texchem initially dropped by as much as 4.08% or three sen to 70.5 sen in morning trades. The stock later recovered to 72.5 sen by market close, still down by 1.36% or one sen, after over 54,000 shares were traded. At its last traded price, the company had a market capitalisation of RM91 million.