Eckem Holdings Berhad is positioned for continued growth, with earnings expected to expand at a double-digit pace over the next three years, supported by market expansion initiatives and capacity growth in its higher-margin rubber manufacturing segment, according to a report by M+Global.
The Malaysia-based investment holding company is principally involved in the distribution, sales and application formulation of specialty industrial chemical products, as well as the manufacturing and trading of rubber products including dental dams, prophylactic dams and lifestyle exercise bands.
M+Global projected Eckem to record a three-year earnings compound annual growth rate (CAGR) of 10.1%, with core profit after tax and minority interest (PATMI) expected to reach between RM5 million and RM6 million over the next three years.
The growth outlook is underpinned by the group’s continued expansion in Malaysia and overseas markets, alongside a planned doubling of its rubber production capacity from FY2028.
The research house assigned a fair value of RM0.14 per share for Eckem, representing a 16.7% upside from its initial public offering (IPO) price of RM0.12.
The valuation was based on a price-earnings (PE) multiple of 16 times, pegged to its FY2027 forecast earnings per share of 0.88 sen.
Eckem’s specialty industrial chemicals segment remains a key growth driver, with the group offering a diversified portfolio of more than 310 products covering resins, pigments, fillers and additives.
The company has established distribution partnerships with several global chemical brands, including BASF SE, Worlee, Wacker, Lanxess, Ingevity, IGM and BLJ.
Unlike commodity chemicals, which compete mainly on pricing and production volume, specialty chemicals require customised formulations to meet specific customer requirements.
This allows Eckem to maintain stronger margins, with the group achieving double-digit profit margins compared with commodity chemical producers that typically operate on lower single-digit margins.
Eckem’s rubber manufacturing business also presents further growth potential, supported by strong margins and rising export demand.
The segment recorded a gross profit margin of 40.3% in FY2025.
The group plans to establish a second manufacturing line at its Rawang facility, which will double annual production capacity from 134 metric tonnes to 268 metric tonnes.
The expansion is targeted for completion in FY2028 and is aimed at meeting increasing demand, particularly from China.
As part of its expansion strategy, Eckem plans to allocate RM6 million, representing 40% of its IPO proceeds, towards constructing a new integrated corporate office, warehouse and laboratory facility in Selangor.
The facility, with an estimated built-up area of approximately 74,772 sq ft, is expected to consolidate the group’s current operations across three rented premises.
The centralised hub is expected to improve operational efficiency, streamline logistics and support future business growth.
M+Global also highlighted that Eckem’s input costs are sensitive to global crude oil prices, as crude oil serves as a key raw material base for specialty industrial chemicals.
The reopening of the Strait of Hormuz and the subsequent moderation in global crude oil and petrol prices could help ease procurement costs and reduce pressure on margins.
The research house said lower oil prices could help protect Eckem from potential raw material cost compression while supporting earnings stability.
Overall, Eckem is expected to benefit from its exposure to specialised chemical solutions, growing export markets and planned production expansion, positioning the company for sustainable long-term growth.
