Mercury lifts SumiSaujana target price by 54pct to 20 sen

KUALA LUMPUR: Mercury Securities Sdn Bhd has increased its target price for SumiSaujana Group Bhd by over 50% to 20 sen from 13 sen, following the specialty chemicals producer's impressive first-half results. The research firm kept its "Buy" rating on SumiSaujana and upped its core earnings forecasts for the fiscal years ending December 31, 2026 (FY26) and FY27 by 28% and 47%, respectively.

Mercury highlighted that SumiSaujana's first-half FY26 results exceeded expectations due to stronger-than-expected gross profit margins and higher average selling prices (ASPs). Consequently, the firm raised its FY26 gross profit margin projection to 31% from 28%, reflecting pricing adjustments, improved product mix, procurement optimization, and cost rationalization efforts.

Mercury also revised its FY26 effective tax rate assumption to 31% from 29%, closely aligning with the 31.4% recorded in the first half. However, the firm decreased its FY26 production output assumption to approximately 14,420 tonnes from the earlier 15,200 tonnes forecast. This adjustment led to reduced FY26 and FY27 revenue estimates by around 3% to RM174 million and RM181 million, respectively.

Mercury maintains a positive outlook on SumiSaujana's medium- to long-term prospects, citing its established specialty chemicals position in the oil and gas sector, geographic diversification, and exposure to leading global energy customers.