Halex, which is not rated by OSK Research, is seeking a listing with a paid-up capital of 80 million shares of 50 sen each. The public offering comprises 10 million new shares, of which six million shares are for the public and two million shares for placement to identified investors.

The research house said that besides being a strong player in agrochemicals, Halex is also a leading manufacturer of healthcare disposable products.

Riding on a 29-year track record, Halex is committed to research and development (R&D) to put it at the forefront of the industry, it said.

“Offering a diverse range of agrochemicals, horticulture and healthcare disposable products, Halex stands out for its diversity,” it said.

OSK Research said while Halex maintains its core business on agrochemicals, it is also involved in the horticulture and healthcare disposable business.
 
“Complementing the agro-based input division, Halex also produces and distributes foliage cuttings for floral arrangements and festive plants to Japan, the US and Singapore.

“In the healthcare industry, Halex is one of the two leading basic manufacturers of treated and bleached facial cotton jumbo rolls and one of the leading producers for wet wipes in Malaysia,” it said.

The research house said that over the years, Halex has established a solid presence in the agrochemical and agriculture sector.

It said this was evident from the company’s commendable top- and bottom-line growth of 20.5% and 6.8% respectively for the past three years.
 
“Just like other agrochemical companies, Halex was not spared the effects from the sharp decline in commodity prices in late 2008.

“However, management has indicated that from February FY09 onwards, there was a marked increase in orders for its agrochemical products as commodity prices started to stabilise,” it said.

The research house said based on its internal forecast, the agriculture sector was expected to decline by 0.5% year-on-year (y-o-y) in FY09, largely due to lower production of both palm oil and rubber.

As commodity prices stabilise, the demand for agriculture sector is expected to improve in FY10 with a y-o-y growth rate of 1.5%.

“In addition, demand for healthcare disposable products is expected to flourish on higher purchasing power and higher demand arising from improved hygiene awareness,” it said.

OSK Research said Halex spends approximately 1% of its total revenue on R&D to strengthen its position within the industry.

“The company also plans to expand the existing facilities in Kawasan Industri Bandar Tenggara, Johor to cater for more production lines. Apart from expanding its customer base, Halex also plans to expand the distribution of proprietary products,” it said.

This article appeared in The Edge Financial Daily, September 4, 2009.