MegaChem - SAC Capital 2024-03-05: Breaking Dawn

• FY23 was a year of circumstances for MegaChem (SGX:5DS) due to the fire in July. The impact of the incident is best illustrated between 2H23 and 1H23 numbers. While 2H23 revenue was flat h-o-h, gross profit fell by 32% to S$9m; gross margin dropped 7.3 ppt to 14.7%.
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If not for the fire.

• Excluding the impact of the fire, MegaChem's 2H23 gross profit would have been up 13% h-h to S$15m; gross margin reflecting historical average of 24%. FY23 net profit would be a positive S$1.9m.

Why breaking dawn?

• In the wildly popular Twilight novel series, The Breaking Dawn instalment revolves around Bella’s newborn daughter, a new beginning, a new life. Post-fire, we expect MegaChem in FY24 and beyond to benefit from green shoots of growth.

AI is not always about Nvidia.

• - Read this at SGinvestors.io -
• Besides the AI sector, the Surface Technology business also includes the rapidly growing Data Centres and the recovering semi-con and aviation/MRO sectors.

Green jet fuels all the rage in Singapore.

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Matthias Chan SAC Capital Research | https://www.saccapital.com.sg/ 2024-03-05

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