Techbond Group Bhd (TECHBND)’s recent acquisition of Malaysian Adhesives and Chemicals (MAC) provides opportunities for the organisation to penetrate into new segments, said Kenanga Research (Kenanga) in a recent report.
MAC’s adhesive products are used further upstream, catering to the production of chipboard, particle board, and paper carton packaging. The group is now aiming to leverage its market expertise and existing client network to increase MAC’s market share in the space.
On the other hand, TECHBND is a B2B adhesives solution provider, offering specialised products researched, designed and tested in-house to meet specific customer requirements.
The group caters mainly to the timber panel, wooden furniture sectors as well as fast-moving consumer goods sectors such as water-resistant sticky labels for beverage bottles and adhesives for carton packaging which are replacing plastic straps or cling film.
TECHBND caters to multinational, local, and regional, furniture players, and enjoys strong customer retention given its proprietary adhesive blends. Its markets by size order are Vietnam, Malaysia, and Indonesia.
Additionally, with an internal R&D department, the group is able to produce adhesives to the specifications of its customers, conducting rigorous testing and providing supporting data to demonstrate products effectiveness.
Premium charges are justified for the increased effectiveness, often resulting in savings for customers through superior application or adhesive performance.
In collaboration with the Malaysian Palm Oil Board (MPOB), TECHBND is looking to offer premium solutions to customers seeking environmentally-friendly adhesives.
Its new polymerisation plant in Vietnam produces polymers used as input for adhesive production. The plant has begun producing raw materials for internal consumption but it is targeting other adhesive manufacturers in niches or markets that TECHBND has no presence yet, for example, China.
Kenanga favours TECHBND due to its customer-centric, solution-provider and manufacturer model, strong customer base across both consumer and woodworking sectors, and diverse and growing presence in South-East Asia,strengthened by the integration of its upstream and midstream operations.
Risks identified by Kenanga include extended downturn in the furniture sector, lower-than-expected production, and foreign exchange translation risk.
