Samchem banks on storage

INDUSTRIAL chemicals may not attract much investor attention, but they are essential to industries ranging from automotive and electronics to paints, packaging and agriculture.

For more than three decades, Samchem Holdings Bhd has quietly built a business supplying these building blocks to thousands of customers across South-East Asia.

Now at a time when geopolitical tensions, supply chain disruptions and volatile freight costs are reshaping global trade flows, the company is betting that greater control over logistics and storage will become increasingly valuable.

The group is moving to strengthen control over its logistics and storage footprint.

It is building its first bulk liquid storage terminal in Pasir Gudang, Johor.

The group plans to invest about RM100mil in the first phase of its development.

It will be used for both its own storage needs and third-party leasing, allowing Samchem to maximise utilisation and generate additional income from spare capacity.

Executive director Ng Ai Rene estimates it will contribute around 20% of additional revenue to the group annually once fully commissioned.

To build the terminal, Samchem has leased industrial land for RM21.08mil under a lease running until May 2051, with an option to extend.

“This is our first venture into the terminal business. It would provide a more visible and recurring income stream that is less exposed to the cyclicality typically associated with our core distribution business,” Ai Rene tells StarBiz 7 via email replies.

Malaysia remains Samchem’s largest earnings contributor, driven mainly by its chemical distribution and blending business.

The group also has a logistics arm with a fleet of more than 100 dry cargo and bulk tanker trucks serving Peninsular Malaysia and Singapore.

Apart from Malaysia and Singapore, Samchem operates in Vietnam and Indonesia.

According to Ai Rene, margins from the storage terminal could exceed 40%, depending on utilisation of the facility’s capacity.

“Having our own storage infrastructure strengthens our ability to support our principals with volumes and ensures more reliable downstream distribution.

“It also allows us to offer a more integrated route-to-market solution. By combining storage with our existing logistics, warehousing and customer network, we can provide a more seamless end-to-end service to both manufacturers and customers, while positioning the group for future growth opportunities,” says the 41-year-old former corporate lawyer, who is the daughter of Samchem’s founder and executive chairman Ng Thin Poh.

On the Pasir Gudang site, she says it was chosen for its position as one of Malaysia’s key industrial and petrochemical hubs.

“The site has direct access to a private jetty along a major shipping route and is located close to Singapore, allowing the group to benefit from growing cross-border industrial activity as companies increasingly shift manufacturing, storage and logistics operations to Johor in search of lower costs and greater land availability.”

Combined with its existing logistics and warehousing network, she adds that the facility is expected to improve efficiency and service reliability.

“The investment for the first phase of the terminal project is estimated at about RM100mil and will be funded via internally generated funds and possibly bank borrowings,” she adds.

The bulk liquid terminal market is dominated by established local and international operators such as Dialog Group, Ancom Nylex, Stolthaven Terminals, part of Norway’s Stolt-Nielsen Group, and Royal Vopak of the Netherlands.

Ai Rene reiterates that Samchem is not seeking to become a broad-based terminal operator, but is instead entering the segment as a “more focused, chemicals-oriented player”, using the facility primarily to strengthen its existing distribution and logistics network while generating additional recurring income from third-party storage services.

An analyst who covers petrochemicals says the expansion could help Samchem reduce its earnings volatility over time.

Many of the world’s larger chemical distributors, he says, have been investing in logistics, storage and other value-added supply chain assets as a way to strengthen customer relationships, improve operational control and diversify their earnings base.

The investment also comes as conditions in the chemical market appear to be stabilising after a challenging 2025.

In the financial year ended Dec 31, 2025 (FY25), the group’s revenue slipped to RM1.11bil from RM1.22bil a year earlier, mainly due to significant pricing pressure across the chemical value chain that resulted in a sharp decline in average selling prices.

Its FY25 net profit was broadly flat at RM17.64mil, helped in part by narrower losses at its Indonesia operations, which account for about 8% of the group’s revenue.

Malaysia contributes about 48% of group revenue, followed by Vietnam (41%) and Singapore (2%).

For 2026, the group is navigating an uncertain macroeconomic environment with “cautious optimism” and has started the year on a stronger footing.

It reported a net profit of RM12.67mil in the first quarter ended March 31, 2026 (1Q26), more than tripling from RM4mil a year earlier, supported by higher gross profit margins.

Revenue, however, slipped slightly due to the strengthening of the ringgit against the US dollar. The group says disruptions in shipping flows through the Strait of Hormuz had led to higher crude oil prices and tighter supply for certain chemicals, lifting overall average selling prices across the sector.

Its cash position stood at RM83.98mil as at end-March 2026, while borrowings, mainly short term, amounted to RM216.3mil.

In the coming quarters, Samchem expects continued volatility in crude oil and feedstock prices to encourage customers to manage inventory levels more conservatively, reinforcing the importance of its investments in supply chain infrastructure.

For now, however, it is not looking beyond the project at hand.

As this is its first terminal project, Ai Rene says focus is on completing it successfully, getting it up and running, and ensuring smooth operations before considering expansion into other markets.

The project is expected to be completed by late 2028. For a sector that rarely attracts investor attention, Samchem may be beginning to stand out.

Its shares have been on an uptrend since March, rising from around 30 sen earlier this year.

At the time of writing, its shares traded at 52 sen, up about 59% year-to-date, giving it a market capitalisation of RM285.6mil.

The Ng family holds a 46.57% stake in the company.