just saw this positive rerating from rhbinvest :) Techbond (TECHBND MK) - Setting Up For FY27; Maintain BUY with new MYR0.37 TP from MYR0.36, 32% upside and c.3% FY27F yield. Techbond’s FY26 results met expectations, with the core profit growth anchored by strategic portfolio optimisation that drove the full-year GPM expansion. While topline growth faced FX translation drag, resilient overseas demand, and utilisation rate above 60% should sustain momentum and support a further 10-15% earnings growth in FY27. At the current market price, Techbond trades at 10x FY27F P/E with a net cash balance sheet.
Within expectations. 4Q26 core profit rose 21% YoY (+22% QoQ) to MYR5.2m, bringing the full-year figure to MYR19.2m (+13% YoY) – this formed 103% and 101% of our and Street’s estimates. The YoY performance improvement was attributed to the portfolio optimisation, which expanded GPM to c.30%. While no dividend was declared during the quarter, the 0.75 sen interim dividend from 1Q26 put the dividend payout ratio at 29.8% of core earnings, in line with management guidance of up to 30%.
Topline and bottomline performance. YoY, revenue was down 12% due to FX headwinds from the strengthening of the MYR. However, this was offset by the abovementioned portfolio optimisation – specifically halting Malayan Adhesives & Chemicals’ (MAC) lower-margin production lines – as well as the higher ASP for the adhesive products due to supply chain disruptions caused by the Middle East conflict, which ultimately improved full-year GPM up to 29.8% (4Q26: 32%, 3Q26: 27.7%). On a QoQ basis, revenue increased 6% on higher order volumes, with front-loaded demand likely contributing, driving sequential improvements in PBT and core profit. The effective tax rate or ETR was higher during the quarter at 25% (3Q26: 15%) mainly due to the underprovision of prior year tax expense being recognised during the quarter.
Outlook remains positive. With the overseas markets generating about 70% of total revenue, underlying topline demand remained resilient on a constant currency basis (+23% YoY in USD, +7% YoY in VND). Hence, given the recent weakening of the MYR against a high base in FY26, management remains confident of sustaining earnings growth in FY27, with net profit expected to grow 10-15%. Operationally, adhesive plant utilisation rates rose from around 50% in FY25 to >60% in FY26, with Jul 2026 holding steady at the similar rate, which we expect the momentum to persist throughout FY27.
We revise our FY27F-28F earnings up by 5% and 2% to account for the stronger margin and the higher order volumes. Our new TP of MYR3.70 is based on a 13x CY27F P/E, at -1SD from the historical KLPRO mean, and includes a 0% ESG premium applied based on Techbond’s 3.0 ESG score.
Key downside risks include prolonged FX volatility and further raw material price escalations.