Multi-Chem Limited (SGX: AWZ)
Business Overview
Multi-Chem operates as a leading regional IT distributor specialising in cybersecurity and network performance products. Established in 2002, the company has built an extensive distribution network spanning 24 cities across 13 countries, positioning itself as a critical intermediary between global technology vendors and regional businesses.
Financial Performance Analysis
Revenue & Profitability Metrics (2024)
- Revenue: S$683.7 million (+4% YoY)
- Gross Profit: S$97.5 million (+3% YoY)
- Net Profit: S$30.8 million (+14% YoY)
- Gross Margin: 14.3%
- Net Margin: 4.5%
Key Financial Strengths:
- Profit Leverage: Despite modest revenue growth of 4%, net profit surged 14%, indicating substantial operational leverage
- Cash Generation: Free cash flow of S$36.1 million (+45% YoY) exceeds net profit, demonstrating excellent cash conversion
- Dividend Coverage: With free cash flow of S$36.1 million and total dividends of approximately S$17.3 million (based on an 8.2% yield), the payout appears well-covered
Financial Health Indicators:
- Free cash flow exceeding net profit suggests strong working capital management
- The ability to grow profits faster than revenue indicates improving operational efficiency
- Strong dividend yield of 8.2% supported by robust cash generation
Business Model Analysis
Competitive Advantages:
- Geographic Diversification: 13-country presence provides risk mitigation and growth opportunities
- Sector Focus: Specialisation in cybersecurity aligns with growing enterprise demand
- Relationship Capital: Long-standing partnerships with technology principals
- Local Market Knowledge: Deep understanding of regional IT requirements
Revenue Drivers:
- Cybersecurity demand acceleration post-pandemic
- Digital transformation initiatives across Southeast Asia
- Network infrastructure upgrades driven by cloud adoption
- Recurring maintenance and support contracts
Investment Considerations
Growth Catalysts:
- Expanding cybersecurity market (estimated 10-15% CAGR globally)
- Regional digital transformation spending
- Potential for higher-margin services revenue
- Geographic expansion opportunities
Risk Factors:
- Distributor margins under pressure from direct sales models
- Currency exposure across multiple markets
- Technology obsolescence risk
- Economic downturn impact on IT spending
Valuation Assessment:
- 8.2% dividend yield appears attractive relative to Singapore REITs (4-6%)
- P/E ratio is likely reasonable given 14% profit growth
- The asset-light model should support higher ROE
First Resources Limited (SGX: EB5)
Business Overview
First Resources is a vertically integrated palm oil producer managing over 200,000 hectares of oil palm plantations across multiple Indonesian provinces. The company’s operations span the entire value chain from cultivation and harvesting to milling crude palm oil (CPO), providing significant control over production costs and quality.
Financial Performance Analysis
Revenue & Profitability Metrics (2024)
- Sales: US$1 billion (+5.9% YoY)
- Gross Profit: US$445.7 million (+22.8% YoY)
- Net Profit: US$245.8 million (+69.1% YoY)
- Underlying Net Profit: US$228.8 million (+56.1% YoY)
- Gross Margin: 44.6%
- Net Margin: 24.6%
Operational Metrics:
- Fresh Fruit Bunches (FFB) Harvested: 3.8 million tonnes (+6% YoY)
- CPO Production: 1 million tonnes (+5.5% YoY)
- FFB to CPO Conversion: ~26% (industry-competitive)
Key Financial Strengths:
- Margin Expansion: Gross margin improved significantly from ~37% to 44.6%
- Cash Flow Turnaround: Positive US$66.5 million free cash flow vs. negative US$36 million in 2023
- Dividend Growth: 58% increase in total dividend payout
- Operational Efficiency: Production growth slightly outpacing harvested volume growth
Commodity Market Analysis
Palm Oil Market Dynamics:
- Indonesia’s biodiesel mandate expansion (B35 to potential B40) will increase domestic consumption
- Global palm oil supply constraints due to El Niño weather patterns
- Sustainable palm oil certification premiums
- Competition from other vegetable oils (soy, sunflower, rapeseed)
Price Sensitivity:
- CPO prices directly impact profitability, given high fixed costs
- Hedging strategies are likely employed for price risk management
- Currency exposure (USD revenues, IDR costs) provides a natural hedge
Operational Analysis
Production Efficiency:
- Young palm trees (planted 2020-2023) are entering a productive phase
- The replanting program ensures sustainable long-term yields
- Mill integration reduces third-party processing costs
- Technology adoption is proving extraction rates
Sustainability Initiatives:
- RSPO (Roundtable on Sustainable Palm Oil) certification
- Zero-deforestation commitments
- Smallholder farmer support programs
- Biodiversity conservation efforts
Investment Considerations
Growth Catalysts:
- Maturing plantations are increasing yield per hectare
- Indonesian biodiesel mandate is tightening supply
- Potential premium for sustainable palm oil
- Replanting program with higher-yielding varieties
- Integration benefits from 2023 acquisitions
Risk Factors:
- Commodity price volatility
- Weather-related production risks (El Niño/La Niña)
- Environmental regulations and deforestation concerns
- Indonesian government policy changes
- Currency fluctuation (USD/IDR)
- ESG scrutiny from international investors
Capital Allocation:
- US$160 million capex planned for 2025
- Focus on replanting and mill upgrades
- Potential for additional acquisitions
- Sustainable dividend policy with 6.9% current yield
Sing Investments & Finance Limited (SGX: S35)
Business Overview
SIF operates as a comprehensive finance company providing deposits, personal financing, and corporate finance services in Singapore. As a non-bank financial institution, it occupies a niche between traditional banks and alternative lenders, serving customers who may not fully meet traditional banking criteria.
Financial Performance Analysis
Revenue & Profitability Metrics (2024)
- Net Interest Income: S$64.7 million (+18% YoY)
- Non-Interest Income: S$7.3 million (+20% YoY)
- Total Income: S$72 million (+18% YoY)
- Net Profit: S$36.3 million (+9% YoY)
- Net Interest Margin: Estimated 8-10% (typical for finance companies)
Key Financial Observations:
- Revenue Acceleration: 18% income growth indicates strong business momentum
- Margin Compression: Net profit growth (9%) lagging income growth suggests higher costs
- Diversification: Non-interest Income growing faster than core lending business
- Dividend Stability: Modest dividend increase from S$0.06 to S$0.065
Business Model Analysis
Revenue Streams:
- Net Interest Income (90% of total Income):
- Personal loans and financing
- Corporate finance and working capital
- Deposit-taking activities
- Spread between borrowing and lending rates
- Non-Interest Income (10% of total Income):
- Loan processing fees
- Insurance commissions
- Foreign exchange services
- Investment advisory fees
Competitive Positioning:
- Higher risk tolerance than traditional banks
- Faster decision-making and approval processes
- Specialised knowledge in niche financing areas
- Relationship-based lending approach
Credit Risk Assessment
Asset Quality Indicators:
- Non-performing loan (NPL) ratios are crucial but not disclosed in the article
- Provisioning levels indicate management’s credit outlook
- Economic sensitivity is higher than banks due to the customer profile
- Diversification across personal and corporate lending
Risk Management:
- Conservative lending practices are essential for finance companies
- Interest rate risk from deposit funding
- Liquidity management is critical for operations
- Regulatory compliance with MAS requirements
Investment Considerations
Growth Opportunities:
- SME financing gap in the Singapore market
- Potential for digital transformation initiatives
- Cross-selling opportunities across product lines
- Possible expansion into new financial services
Risk Factors:
- Economic downturn impact on credit quality
- Interest rate environment changes
- Regulatory restrictions on finance companies
- Competition from banks and fintech companies
- Geopolitical uncertainty affecting business confidence
Management Outlook:
- Cautious 2025 guidance due to:
- Geopolitical conflicts
- Trade policy uncertainties
- Trump administration tariff policies
- Economic volatility
Dividend Sustainability:
- 5.8% yield appears sustainable based on earnings
- Conservative payout ratio allows for economic cycle management
- Finance company dividends are typically less volatile than banks ‘ dividends
Comparative Investment Analysis
Dividend Yield Comparison
- Multi-Chem: 8.2% (highest yield, strong cash flow coverage)
- First Resources: 6.9% (commodity-linked, cyclical nature)
- SIF: 5.8% (lowest yield, most stable business model)
Growth Profile
- Multi-Chem: Secular growth in cybersecurity, geographic expansion
- First Resources: Cyclical commodity business with structural demand drivers
- SIF: Moderate growth, dependent on Singapore’s economic conditions
Risk Assessment
- Multi-Chem: Technology disruption, distributor disintermediation
- First Resources: Commodity price volatility, ESG concerns
- SIF: Credit risk, economic sensitivity, regulatory constraints
Portfolio Considerations
Income-Focused Investors: Multi-Chem offers the highest current yield with growth potential. Value Investors: First Resources trading at commodity cycle recovery point.t Conservative Investors: SIF provides stable, predictable returns with lower volatility
Diversification Benefits: All three operate in different sectors (Technology, Commodities, and Financial Services), providing portfolio diversification across Singapore’s equity market segments.
The Dividend Hunter: A Singapore Investment Story
Chapter 1: The Morning Revelation
The gentle hum of the air conditioning filled Marcus Lim’s Sengkang apartment as he sipped his kopi-o and scrolled through his phone at 6:30 AM. At 45, the senior project manager at a local engineering firm had been investing for over two decades, but lately, something felt different about the market.
His CPF statements showed healthy growth, his HDB flat had appreciated nicely, and his blue-chip portfolio, comprising DBS, Singtel, and CapitaLand REITs, provided steady returns. But with inflation creeping up and his daughter heading to university next year, Marcus knew he needed his money to work harder.
“Eh, look at this,” he muttered to his wife, Linda, as she prepared their breakfast. “My dividend yield from the STI ETF is barely 3%. At this rate, our retirement fund won’t keep up with rising costs.”
Linda, a pragmatic accountant, glanced over. “Then maybe it’s time to stop playing it so safe, lah. Remember what your ah gong always said – ‘Don’t put all your eggs in one basket, but make sure the baskets can actually carry the eggs.'”
Marcus chuckled at his late grandfather’s Hokkien-influenced wisdom. The old man had built a small fortune trading commodities in the 1970s, always preaching about finding companies that could both grow and pay you while you wait.
Chapter 2: The Research Rabbit Hole
That evening, after a particularly frustrating day dealing with delayed project approvals, Marcus found himself diving deep into SGX filings. His investment club friends at the void deck coffee shop had been raving about dividend-paying growth stocks, but Marcus preferred to do his own homework.
“Wah, this Multi-Chemis is quite interesting,” he said aloud, startling his cat, Merlion, who was perched on his desk. The company’s 8.2% dividend yield caught his attention, but what impressed him more was the business story.
Having worked in IT procurement himself, Marcus understood the complexities of the cybersecurity landscape. “Cyber attacks are getting worse every year,” he mused, remembering his own company’s recent security upgrade. “And this Multi-Chem, they’re not just selling routers and switches anymore – they’re the middleman for all the security products companies need.”
He pulled up the financial statements, cross-referencing with his own Excel model. “S$683 million revenue, but look at this cash flow – S$36 million! That’s real money, not accounting tricks.”
His phone buzzed with a message from his investment club WhatsApp group: “Anyone looked at palm oil stocks? My broker friend says biodiesel mandate is a game-changer.”
Marcus paused his Multi-Chem analysis and began researching First Resources.
Chapter 3: The Palm Oil Dilemma
The following Saturday morning, Marcus met his investment club at their usual kopitiam in Ang Mo Kio. The group of six middle-aged Singaporeans had been meeting monthly for five years, sharing investment ideas and collectively learning from their mistakes.
“Eh, Marcus, you mentioned you were looking at some high-yield stocks. Share lah,” said David, a retired civil servant who had become the group’s unofficial moderator.
Marcus pulled out his tablet, which now contained detailed notes on all three companies. “I found this interesting combination – growth and dividends above 5.8%. But got some dilemmas.”
He started with First Resources. “On paper, it looks fantastic. US$245 million profit, up 69%. The biodiesel mandate in Indonesia is expected to create structural demand for palm oil. But…”
“But what?” Siti, the group’s ESG enthusiast, asked.
“Environmental concerns, lah. My daughter already lectures me about sustainability. Last week, she asked why I still invest in ‘planet-destroying companies.’ How to answer?”
The group fell silent. This wasn’t just about returns anymore – it was about values, family discussions, and long-term consequences.
“Maybe can look at their sustainability report?” suggested David. “I heard First Resources got some certification already.”
Marcus nodded, making a mental note. “The numbers are solid, though. 6.9% dividend yield, and they switched from negative to positive cash flow. Plus, Indonesia’s biodiesel program means less palm oil available for export, which should support prices.”
Chapter 4: The Conservative Choice
Over the following week, Marcus researched Sing Investments & Finance during his evening MRT rides home. Unlike the excitement of Multi-Chem’s tech growth story or First Resources’ commodity recovery, SIF felt familiar – almost boring.
“It’s like the neighbourhood provision shop of finance companies,” he explained to Linda over dinner. “Not flashy, but steady income.”
The 5.8% dividend yield wasn’t spectacular, but the business model resonated with Marcus’s risk-averse nature. “They lend to people and companies that banks might reject, but they’re careful about it. Been around since the 1960s, survived multiple recessions.”
“Sounds like something your ah gong would approve,” Linda observed.
Marcus smiled. His grandfather had always favoured businesses he could understand, and SIF’s model was straightforward: take deposits, lend money, and earn the spread.
But the management’s cautious 2025 outlook concerned him. Trade wars, geopolitical tensions, Trump tariffs – all factors that could impact Singapore’s economy and, by extension, SIF’s lending business.
Chapter 5: The Decision Matrix
Sunday afternoon found Marcus at East Coast Park, jogging along the beach while mentally organising his thoughts. The three stocks represented different aspects of his investment philosophy:
Multi-Chem embodied his belief in secular trends. Cybersecurity wasn’t going away, and the company’s regional expansion story appealed to his understanding of Southeast Asian business dynamics.
First Resources represented value investing with a catalyst. The biodiesel mandate and operational improvements created a compelling turnaround story, despite concerns about ESG.
SIF offered stability and predictability, characteristics he increasingly valued as he approached his 50th birthday.
Back home, he created a decision matrix that weighed factors such as dividend sustainability, growth potential, risk level, and alignment with his values.
Chapter 6: The Portfolio Construction
“I think I know what Ah Gong would do,” Marcus told Linda that evening as they watched the sunset from their balcony.
“He’d buy all three, but in different proportions based on risk and conviction.”
Marcus had decided on a barbell approach: 40% in Multi-Chem for growth and high yield, 25% in SIF for stability, and 35% in First Resources for value recovery – but only after confirming their sustainability credentials.
“The combined portfolio should yield around 7%,” he calculated. “That’s more than double my current dividend income, and each company is growing profits.”
“What about the risks?” Linda asked, her accountant training kicking in.
“Diversified across sectors – technology distribution, commodities, and financial services. Different risk factors, different economic sensitivities. And all three are profitable, cash-generating businesses.”
Chapter 7: The First Purchase
Monday morning, Marcus called his CDP Securities account broker; he preferred human interaction for significant trades, unlike his daughter, who used robo-advisors.
“Uncle Marcus! Long time no hear from you. What are you looking at today?” came the familiar voice of James, his relationship manager for the past decade.
“I want to start positions in three stocks, but going to dollar-cost average over three months,” Marcus explained his plan.
“Wah, Multi-Chem at 8.2% yield? That one is quite popular recently. But are you certain about palm oil stocks? Very volatile, you know.”
Marcus appreciated James’s caution. “That’s why I’m spreading the risk. Small positions first, see how they perform.”
His first tranche: S$5,000 each in Multi-Chem and SIF, S$7,000 in First Resources. Total S$17,000 – significant but not life-changing if things went wrong.
Chapter 8: The Waiting Game
Three months later, Marcus reviewed his positions during the investment club’s year-end gathering. The results were mixed but encouraging:
Multi-Chem had announced a new partnership with a significant European cybersecurity vendor, and the stock had gained 12%. The Q3 dividends had been paid on time.
First Resources experienced some volatility due to fluctuations in the palm oil price, but the company’s operational metrics remained strong. The sustainability report was reassuring, with genuine progress on deforestation commitments and support programs for smallholders.
SIF had been the steadiest performer, barely moving but paying its dividend like clockwork. Recent earnings showed continued growth in net interest income, though credit provisions had increased slightly.
“So far, so good,” Marcus reported to the group. “Combined yield is holding at around 7.2%, and two of the three companies reported better-than-expected results.”
Chapter 9: The Daughter’s Question
During Chinese New Year dinner, Marcus’s daughter, Rachel, home from NUS for the holidays, asked about his investments. As a business student, she was curious about her father’s stock picks.
“Pa, you always taught me to invest in what I understand. Do you really understand palm oil commodity cycles?”
The question stung because it was fair. Marcus had thoroughly researched First Resources, but did he truly comprehend the complex dynamics of CPO pricing, Indonesian government policies, and global biodiesel demand?
“You know what, that’s a good point,” he admitted. “Maybe I should reduce that position and add more to Multi-Chem. At least I understand the cybersecurity business better.”
“What about ESG factors? My generation cares about these things, Pa.”
Marcus nodded thoughtfully. His investment decisions weren’t just about his own returns anymore; they reflected the values he wanted to pass down.
Chapter 10: The Rebalancing
Six months into his dividend growth experiment, Marcus made adjustments. He reduced his First Resources holding by half, taking profits from the commodity rally, and increased his Multi-Chem position during a temporary dip in the market.
The portfolio is now weighted 50% Multi-Chem, 30% SIF, and 20% First Resources – still diversified but aligned more closely with his expertise and comfort level.
“Uncle, your Multi-Chem position is quite big already. You sure you want to add more?” James asked during their quarterly review call.
“It’s my highest conviction play,” Marcus replied. “The business is growing, management is disciplined, and the cybersecurity megatrend has years to run. Plus, an 8% dividend yield is hard to find elsewhere.”
Epilogue: One Year Later
Sitting in the same kopitiam where he’d first discussed these stocks, Marcus reflected on his dividend growth journey. The portfolio had delivered exactly what he’d hoped for – high current Income with capital appreciation potential.
Multi-Chem had been the star performer, announcing expansion into two new countries and raising its dividend by 8%. SIF had provided steady returns and reliabIncomeome, while First Resources had been volatile but profitable overall.
More importantly, Marcus had learned to balance quantitative analysis with qualitative factors, such as sustainability and personal conviction. His daughter’s questions had made him a more thoughtful investor.
“Ah gong was right,” he mused, sipping his kopi-o. “Don’t just find baskets that can carry the eggs – make sure you understand how the baskets are made.”
His phone buzzed with a message from Rachel: “Pa, saw Multi-Chem’s latest results. Good call on the cybersecurity trend. Maybe you should teach a course on dividend investing!”
Marcus smiled. Perhaps the student was ready to become a teacher. But first, he had some new high-yield stocks to research for next month’s investment club meeting.
The dividend hunt, it seemed, was never really over.
Maxthon
In an age where the digital world is in constant flux and our interactions online are ever-evolving, the importance of prioritising individuals as they navigate the expansive internet cannot be overstated. The myriad of elements that shape our online experiences calls for a thoughtful approach to selecting web browsers—one that places a premium on security and user privacy. Amidst the multitude of browsers vying for users’ loyalty, Maxthon emerges as a standout choice, providing a trustworthy solution to these pressing concerns, all without any cost to the user.
Maxthon, with its advanced features, boasts a comprehensive suite of built-in tools designed to enhance your online privacy. Among these tools are a highly effective ad blocker and a range of anti-tracking mechanisms, each meticulously crafted to fortify your digital sanctuary. This browser has carved out a niche for itself, particularly with its seamless compatibility with Windows 11, further solidifying its reputation in an increasingly competitive market.
In a crowded landscape of web browsers, Maxthon has carved out a distinct identity through its unwavering commitment to providing a secure and private browsing experience. Fully aware of the myriad threats lurking in the vast expanse of cyberspace, Maxthon works tirelessly to safeguard your personal information. Utilising state-of-the-art encryption technology, it ensures that your sensitive data remains protected and confidential throughout your online adventures.
What truly sets Maxthon apart is its commitment to enhancing user privacy during every moment spent online. Each feature of this browser has been meticulously designed with the user’s privacy in mind. Its powerful ad-blocking capabilities work diligently to eliminate unwanted advertisements, while its comprehensive anti-tracking measures effectively reduce the presence of invasive scripts that could disrupt your browsing enjoyment. As a result, users can traverse the web with newfound confidence and safety.
Moreover, Maxthon’s incognito mode provides an extra layer of security, granting users enhanced anonymity while engaging in their online pursuits. This specialised mode not only conceals your browsing habits but also ensures that your digital footprint remains minimal, allowing for an unobtrusive and liberating internet experience. With Maxthon as your ally in the digital realm, you can explore the vastness of the internet with peace of mind, knowing that your privacy is being prioritised every step of the way.