TMK Chemical earnings expected to recover in 3Q

PETALING JAYA: The worst is behind in the second quarter of 2025 (2Q25) for TMK Chemical Bhd and earnings are expected to recover in 3Q25, says Affin Hwang Investment Bank.

The research house said it came away reassured from its recent meeting with TMK management, with guidance that the worst is behind it in 2Q25.

“Earnings are expected to recover from the trough in 3Q25, underpinned by cost savings from lower electricity tariffs and stronger operational momentum.

“We continue to like TMK for its business resilience, Asean growth exposure and undemanding valuation,” Affin Hwang Investment Bank said in a recent report.

The research house said that with recovery underway and structural growth drivers intact, TMK stands out as a “compelling Asean industrial play offering resilience, visibility and value”.

“Importantly, investors should reframe their perception of TMK – not as a typical cyclical chemical company, but as a more resilient, solutions-driven industrial player whose performance is increasingly tied to the Asean market growth,” Affin Hwang Investment Bank said.

The research house said key earnings drivers of the group for the next 18 months are sustained Singapore momentum, Vietnam recovery and capacity expansion.

Affin Hwang Investment Bank said the group’s Singapore operations make up 30% of group revenue.

“With limited competition and an attractive cost structure, TMK should sustain earnings traction and continue expanding its market share,” the research house said.

Affin Hwang Investment Bank said construction activity in Vietnam is expected to pick up after years of softness, positioning TMK to benefit from the cyclical rebound.

With regards to capacity expansion, the research house noted a second plant (expected 4Q26) is already anticipated to see healthy take-up (about 60%), given near-full utilisation at the current facility, providing further earnings visibility.

“Quarterly earnings could normalise at about RM30mil or better.

“On conservative financial year 2026 earnings of RM120mil to RM140mil, TMK trades at eight to nine times price-to-earnings ratio with an attractive 3.5% to 5.8% dividend yield (based on RM130mil mid-earnings and 30% to 50% payout),” Affin Hwang Investment Bank said.