Megachem

Catalist-listed Megachem, an integrated specialty chemical solutions provider, reported a 18.6% YoY rise in revenue to S$40.9m in 1H08 and a 12.8% YoY rise in net profit to S$1.5m. Without a one-off gain from land sale in 1H07, net profit would have risen 51.7% YoY. Gross profit margin increased from 18.3% in 1H07 to 19.3% in 1H08. Revenue in all markets except China and Europe registered an increase. Its operations in China experienced a 24.9% YoY decline in revenue due to a shortage of materials for the construction industry as well as from stiff competition, while management expects that the Middle East and Vietnam would contribute greatly to future growth of the group. Going forward, management is concerned that high oil prices may exert pressures on profit margins, but it plans to pass on further increases in costs to customers.

As a well-diversified group with direct presence in 10 countries and covering many industries, management expects that business will be resilient to sector-specific downturns, but a global recession would hamper growth in the short term.

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