TMK Chemical Earnings Rebound, Signals End of Post-IPO Decline
The distributor of basic and specialty chemicals, TMK Chemical Bhd (KL:TMK), successfully reported a significant earnings rebound in its second quarter ended June 30, 2025 (2QFY2025).
This positive result effectively snapped the quarter-on-quarter profit decline that the company had experienced since its debut on Bursa Malaysia’s Main Market in December 2024.
The company is now projecting a further, sustained improvement in its financial performance as broader market demand begins to stabilize and recover.
This optimistic outlook is primarily underpinned by a stronger sense of confidence among its customers regarding prevailing market conditions and the welcome absence of any major production disruptions, such as those faced in the prior quarter.
The net profit for 2QFY2025 increased by 2.6% quarter-on-quarter (q-o-q), reaching RM21.32 million from the RM20.77 million posted in the preceding quarter.
While this figure still remains below the RM22.88 million and RM29.16 million recorded in 4QFY2024 and 3QFY2024, respectively, the sequential growth signals a clear turnaround.
The stronger earnings were directly driven by a 2.2% q-o-q rise in revenue, which amounted to RM263.75 million.
Executive director and managing director Wong Kin Wah confidently asserted that the previous trend of declining profitability is now firmly in the past, attributing the earlier volatility to widespread geopolitical uncertainty and the unsettling effects of new US political developments on market sentiment across the entire region, not just for TMK Chemical’s operations alone.
Geopolitical Clarity Restores Customer Confidence and Demand
Executive Director Wong Kin Wah elaborated on the headwinds that impacted performance during the first half of the year, explaining that global market volatility and pervasive geopolitical uncertainty significantly dampened demand across the entire market, affecting not just the operations of TMK, but the chemical sector at large.
The re-election of US President Donald Trump and the subsequent introduction of new policy uncertainties were key factors that severely rattled market sentiment.
These developments made it extremely difficult for many customers to plan their production schedules on a longer-term basis, which inevitably led to weaker overall consumption of chemical products across the entire Southeast Asian region.
The impact was widespread, affecting major markets such as Việt Nam, Singapore, and even Mainland China, confirming that geopolitical factors were the main reason weighing heavily on TMK Chemical’s profitability during that period.
Now, the situation is improving, as greater clarity emerges regarding US tariff policies affecting countries crucial to TMK Chemical’s operations, including Malaysia, Singapore, and Việt Nam.
This clarity is enabling the chemical product customers to better and more accurately plan their future production needs.
For instance, the US and Malaysia recently signed a reciprocal tariffs agreement capping duties on Malaysian exports to the US at 19%.
Similar trade deals are being finalized with Việt Nam, and Singapore is actively negotiating its own agreement, reducing the uncertainty that previously plagued the trade environment.
Strategic Expansion and Vertical Integration Bolster Future Outlook
Beyond the macroeconomic factors, the deputy chairman and substantial shareholder, Leong Chao Seong, noted that a major localized disruption—a gas pipeline explosion in Putra Heights, Selangor, in April—further impacted many of TMK Chemical’s customers, causing supply disruptions of up to 18 days due to gas shortages.
This resulted in real production losses for many factories spanning from the Klang Valley up to Penang, directly leading to lower consumption of the company’s chemical products.
However, Leong now points to a distinct change, stating that demand for TMK products has already begun to pick up in the third quarter, with stronger orders anticipated for the fourth quarter compared with the third.
He noted that in the first half of the year, many customers held back purchases due to uncertainty, keeping raw material inventories low and limiting finished goods.
With things now returning to normal and confidence coming back, a clear trend is visible in Malaysia’s Industrial Production Index (IPI), which has shown significantly improved numbers since May, with the manufacturing IPI reaching its highest point since 2015 in August.
The vertically integrated structure of TMK Chemical—which spans trading, logistics, storage, and manufacturing—is a critical strategic advantage that enables the group to manage costs and margins more effectively despite the intense competition from regional players.
The company is actively executing its expansion plans, including the RM120 million Banting Plant 2 project, funded by its IPO proceeds, which will double its chlor-alkali derivatives capacity to 432,000 tonnes per year by the fourth quarter of 2026.
This expansion is projected to contribute an additional RM140 million to RM150 million in annual revenue, adding approximately 10% to the group’s top line, further cementing its commitment to long-term sustainable growth and market leadership in the region.
