Investors likely to stick to Techbond on better prospects, PPB Group’s entry

Techbond Group Bhd has been on a good run since it hit a low of 36 sen about a year ago. The counter has risen some 41% to close at 52 sen on July 26. It managed to touch a 52-week high of 58 sen in June. The stock has been consolidating for the past 1 month since hitting the 58.5 sen high in June. The adhesive manufacturer share price may push on to test the historical resistances at 55 sen and 58.5 sen next.

The interest in Techbond could stem from the entry of diversified group PPB Group Bhd after it bought a 15% stake in June. This propelled the counter to reach its highest in more than three years. PPB, which is controlled by Malaysian tycoon Robert Kuok, emerged as a substantial shareholder in Techbond after acquiring over 82.9 million shares and over 34 million unexercised warrants in the company from Sonicbond Sdn Bhd via a direct business transaction for RM37.67 million.

The shareholding of Sonicbond, reduced to 54.39% after the disposal of the shares to PPB. Sonicbond is a private vehicle of Techbond managing director Lee Seng Thye. PPB said the investment in Techbond is long-term in nature as it expects the manufacturer of adhesives and sealants to benefit from global industrial growth in various sectors such as construction, automotive, woodworking, and packaging industries.

Prior to PPB’s entry, Kenanga had already initiated its coverage on the company on April 17 at 39 sen, with an “outperform” rating and a target price of 45 sen. The research house likes Techbond for its customer-centric, solution-provider and manufacturer model with strong customer base in the consumer and woodworking sectors.

In addition, the company has a diverse and growing presence in Southeast Asia, strengthened by the integration of its upstream and midstream operations, and the recent expansion with the acquisition of Malaysian Adhesives and Chemicals (MAC). It is interesting to know that MACH is a half-century-old adhesive and chemical firm that was acquired by Techbond from PPB last year. Kenanga said Techbond is getting a strong strategic partner in PBB with its extensive regional operations, including a strong presence in China and India, as well as a global network.

Techbond posted its best-ever financial performance since its listing in 2018. Techbond's net profit nearly doubled to RM11.5 million for the nine months of FY2024 from RM5.75 million a year ago. This was on the back of 50.7% jump in revenue to RM112.6 million from RM74.8 million. Investors should be excited over having PPB as Techbond’s substantial shareholder as this could mean accelerated growth and higher market value.