NYLEX (4944) - Nylex - Robust Time Ahead
Nylex (Malaysia) Berhad is engaged in manufacturing and marketing of Polymer and Industry Chemical products. It's products include geotextiles, prefabricated sub-soil drainage system, rotomolded plastic products, petrochemical and industry chemical products.
With the current challenging business environment in the world, what could be the silver lining for Nylex for 2015 and the coming years ahead?
During the glorious days, Nylex had been trading at the range of RM 1.60 before 2008 financial crisis which had saw Lehman Brothers got wipe out from the crisis. While Nylex had weathered the days of doom, what is prepared for Nylex in the days ahead ?
Nylex had been consolidating at the range of RM 0.60. However, Nylex should be able to start to see an uptrend moving in the coming days from a strings of benefit due to lower raw material input from a lower crude oil price.
A quick outlook might suggest that Nylex should be able to gain traction and see more volume as Nylex could march it's way towards RM 0.70 as it's first resistant.
Nylex - Better Margins Ahead
Few years back, the petrochemical and industry chemical sector had been seeing challenging moments due to the slower economy in the European region. Although the demand for the petrochemical and industry chemical had been on the rise, big players involved in the game will see the industry continue to be challenging.
However, with the lover looming crude oil prices that had crashed from USD 80 a barrel to lower than USD 50 per barrel, this could be a good silver lining for the whole industry starting 2015. While the market had continue to talk about the over supply and insufficient of warehouse storage for the crude oil, chances of the crude oil dropping further towards the range of USD 30 could be a possible note of happening, an event that will only see Nylex putting up with even cheaper raw material ahead, and enjoy a better profit margin.
Strengthening Presence in Indonesia
Nylex already had presence in Indonesia through PT Nylex Indonesia. While the unit in Indonesia had been doing greater with increase in revenue, the result is hampered with the forex losses from a weakened Indonesia Rupiah. However, with the completion of the new Surabaya Plant in 1Q 2015, it is established a stronger presence in Indonesia, and the management is expecting a better return on investment in 2015.
Nylex will continue to tap more into the Indonesian market, which is one of the company long term goal to have a stronger presence in Indonesia.
European Stimulus Program
The European Stimulus Program under Mario Draghi will see 60 billion Euro injected into the economy every month until Sep 2016 to stimulate the european economy through bond buying program. ECB had contested that the QE program is had started to boost recovery. Latest data show that a total of 41 billion Euros is being repurchased by March 27, 2015.
Good revaluation reserve
At a NTA of RM 1.55, Nylex still command a good revaluation reserve with properties and asset seeing old valuation as far as 1985.
Nylex could be an interesting company to be look out at for 2015 as a good beneficiary towards the cheaper crude oil. Nylex will probably see a stronger quarter with the start of it's new plant in Surabaya, and better demand from the overseas sales prior to the ECB stimulus program.
t the current price of RM 0.60, Nylex is just trading at 38% from it's NTA of RM 1.55. The company had been paying dividend of at least 2 cents per ordinary share for the past 5 years.
Bone's short term TP : RM 0.70
Cheers and have a nice day
Regards,
Bone
http://bonescythe.blogspot.com
