Polymer engineering demand key to Texchem’s outlook

PETALING JAYA: Texchem Resources Bhd – which released its second quarter ended June 30, 2026 (2Q26) financial results last Thursday – is banking on demand for automated transport equipment materials to drive growth in the company’s polymer engineering (PE) division, according to RHB Research.

The research house, which has maintained a “buy” call and target price (TP) of RM1.39, said the 2Q26 results were in line with its expectations.

RHB Research added that the TP implies 9.8 times financial year ending Dec 31, 2026 (FY26) price-to-earnings.

It views the valuation of the shares – trading at five to six times FY26 price-to-earnings – as compelling, given the firm growth trajectory and exposure to the semiconductor industry due to demand for automated transport equipment materials.

Beyond PE, Texchem operates across four other divisions – industrial, food, restaurant and venture businesses – of which the industrial division contributes approximately half its revenue.

Notably, the company operates the popular Sushi King chain of restaurants.

It said the 2Q26 performance was supported by broad-based growth across all business segments and underpinned by higher revenue, improved margins from operating leverage, cost rationalisation, cost pass-through initiatives, and the turnaround of the food division.

RHB Research said the restaurant segment “is benefitting from ongoing brand revitalisation, a greater focus on the kiosk model, and outlet rationalisation”.

It noted that the industrial division may see some volume normalisation in the second half of 2026 (2H26), following strong inventory replenishment in 1H26.

“Meanwhile, the food division is targeting a sustained turnaround on a lower cost base alongside growing domestic sales for fishmeal products,” it said, adding that the company has plans to invest RM50mil in additional PE machinery over the next two years and expand its restaurant footprint by another 10 to 15 outlets/kiosks.