Fairchem came out with a decent set of results, with sales growing by 45% and margins reviving to 13%. Management is very bullish on quick scaleup in isostearic acid which seems to be the near term growth driver, along with continued margin revival. Concall notes below.
FY24Q3
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Sales volume increased by 2.64% and value decreased by 2.8% quarter-to-quarter
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Process quantity was 15,277 MT (4.9% lower on Q-o-Q). 15% higher on 9MFY24 vs 9MFY23
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Q3 Dimer acid: 2,000 tons, linoleic acid: 7,000 tons
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9M Dimer acid: 6,000 tons, linoleic acid: 22,000 tons
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Isostearic acid :
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10 MT export shipment to EU in December, revenues not booked as they book revenue once customer receives shipment (CIF basis)
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Overall capacity of 2000 MT and hope to reach full utilization in December 2024
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Croda, Arizona have higher capacities
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Will allow them to better compete with Chinese on dimer acid as isostearic acid scales
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Differentiated product, required 5-6 years of development to manufacture because technology is not available off the shelf
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Export : 10% of sales in Q3. Will not face delay due to Red sea crisis for US exports
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Linoleic acid : China doesn’t compete because of high freight component
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Overall capacity: 120,000 MTPA. 80,000 MTPA dedicated towards current products including isostearic acid and 40,000 MTPA are earmarked for new projects. Have adjoining land for expansion if required
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Growth focus will not shift towards introducing higher value items than just processing more input material
Disclosure: Invested (position size here, bought shares in last-30 days)