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Controlling shareholders of Megachem and RE & S top up respective stakes

The Edge Singapore
The Edge Singapore  • 3 min read
Controlling shareholders of Megachem and RE & S top up respective stakes
Megachem's strategy is to have diversification in terms of customer base as well as supply sources
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Sidney Chew Choon Tee, managing director of chemicals distributor Megachem, on Sept 3 acquired 35,000 shares of the company for 42 cents each. With the purchase, Chew raised his direct stake to around 46.8 million or 35.093%, from 35.067% previously.

In addition, Chew’s wife, Liau Bin Bin, holds her own stake of 444,296 shares or 0.333%, which counts as Chew’s deemed stake. With that, he has a total interest of 47.2 million shares or 35.426%.

Before the latest transaction, Chew had on June 9 and April 12 acquired 2,000 shares for 42 cents each and 18,000 shares for 40 cents each respectively.

Megachem distributes over 1,000 different types of speciality chemicals to over 2,000 different customers. In addition, it manufactures chemicals according to customers’ specifications too.

For its 1HFY2021 ended June 30, the company reported earnings of $3.8 million, up 34% y-o-y to $2.8 million. Revenue in the same period was up 26.7% y-o-y to $65.9 million. The company plans to pay an interim dividend of 0.8 cent per share.

In the earnings commentary, Megachem notes that its industry is closely tied to the global economy. “As business sentiments improve, the chemical industry is also seeing an uptick in activities along with firmer chemical prices, although current supply shortage and high freight cost may cap its growth,” it adds.

In response to questions from shareholders on the impact of disrupted supply chains, Megachem notes that so far, “demand has outstripped supply”. “We have been trying to pass the higher cost to our customers. This is evident in the fairly stable gross profit margin during the first half of this year as well as in the past,” the company says.

Megachem adds that one of the key elements of its strategy is diversification in terms of customer base as well as supply sources, which gives it more “agility” to react to changes in the market. “With diversified sources of supply, we are able to switch from high-cost to lower-cost supply in response to the soaring freight rates,” the company adds.

F&B to normalise gradually

Tatara Hiroshi, who founded RE & S Holdings back in 1988, steadily increased his stake in the operator of Japanese-themed F&B business.

Tatara, who holds the title of president and executive director, most recently on Sept 3 acquired 5,000 RE & S shares for $1,000 or an average of 20 cents.

With that purchase, Tatara’s interest in the company, which runs brands such as Kuriya, Shimbashi Soba, Kuishin Bo and Ichiban Boshi, increased further to nearly 220.3 million shares, or 62.23%.

On Sept 2, he paid 21 cents each for 25,000 shares; on Sept 1, he acquired 50,000 shares for 20.7 cents each.

Between Aug 26 and Aug 30, Tatara bought 1.05 million shares for a total of $193,535.10 or 18.4 cents each.

On Aug 25, the company reported earnings of $9.5 million for the FY2021 ended June 30, reversing from a loss of $5.4 million in FY2020. Revenue in the same period was up 12% to $124 million as the company generated more online sales.

RE&S plans to pay a final dividend of 0.85 cent, which, coming on top of the interim dividend of 0.85 cent, will bring the full-year payout to 1.7 cents equivalent to a payout ratio of 60%.

In its earnings commentary, the company notes that the F&B industry has been “severely impacted” by the growing number of infections.

“However, with the successful roll-out of national vaccination programmes and the significant rise in the vaccination rate in Singapore, the market is expected to normalise gradually.

Recently, the government has permitted dining-in to resume for fully vaccinated people, bringing positive light to the F&B industry,” the company adds.

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