Assessing Resintech Berhad's Growth Potential in the Malaysian Semiconductor Sector

Malaysia's semiconductor industry is undergoing a transformative phase under the National Semiconductor Strategy (NSS), which aims to elevate the country's role in the global value chain. With over RM63 billion in investments secured as of March 2025-RM58 billion from foreign sources and RM5 billion domestically-the sector is poised for rapid expansion, according to The Edge. This growth is driven by projects such as Infineon's 200mm silicon carbide power fab and Carsem's advanced packaging facilities, which underscore Malaysia's shift toward high-value manufacturing and design under the National Semiconductor Strategy. For investors, the question arises: Can Resintech Berhad, a leading high-density polyethylene (HDPE) pipe manufacturer, capitalize on these tailwinds?

Strategic Positioning: From Water Infrastructure to Semiconductor Enablers

Resintech Berhad's core business lies in manufacturing HDPE pipes and fittings, a critical component for water infrastructure modernization. The company's recent RM16.5 million contract with Phnom Penh Water Supply Authority (PPWSA) in Cambodia, as reported by The Sun, and RM15 million in orders from Pengurusan Aset Air Bhd (PAAB) in Malaysia, according to NST, highlight its alignment with national and regional water supply upgrades. These projects are directly tied to the 12th Malaysia Plan's goal of reducing non-revenue water (NRW) from 34% in 2020 to 25% by 2025, a trend covered by Focus Malaysia.

While Resintech is not a semiconductor manufacturer, its products are indirectly essential to the sector. Semiconductor fabrication facilities (fabs) require ultra-pure water for processes like wafer cleaning and cooling, with industry forecasts suggesting water usage in the sector could double by 2035, according to IDTechEx. Resintech's HDPE pipes, known for their durability and leak resistance, are well-suited for such high-demand applications. For instance, the company's expansion into Sarawak and Sabah-regions with aggressive water infrastructure plans-positions it to supply utilities to future semiconductor clusters in East Malaysia, a point noted in another The Sun report.

Financial Performance and Operational Efficiency

Resintech's financials reflect robust growth. In FY2025, revenue surged to RM125.07 million, with Profit Before Tax (PBT) more than doubling to RM17.02 million, according to a ChenPak analysis. This outperformance is attributed to increased demand for pipe systems and a 27.77% year-on-year revenue boost in Q3 FY2025, as reported by gov.capital. The company's earnings per share (EPS) also improved significantly, rising to RM0.058 in FY2025 from RM0.031 in FY2024, per Yahoo Finance.

Operational efficiency is a key competitive advantage. The ChenPak analysis notes Resintech operates at 80% of its HDPE pipe production capacity, leaving room for scaling without major capital expenditures. Strategic acquisitions, such as Forward Metal Works Sdn Bhd, and partnerships like the one with SEDC Energy-focused on renewable energy projects including algae-based Sustainable Aviation Fuel (SAF)-demonstrate a proactive approach to diversification.

Valuation and Market Tailwinds

Resintech's valuation appears attractive relative to its growth trajectory. With a P/E ratio of approximately 16x (based on FY2025 earnings reported by Yahoo Finance), the stock trades at a discount to regional peers in the infrastructure and materials sectors. This is supported by its strong order book, including the RM16.5 million Cambodia contract reported by The Sun, and its alignment with Malaysia's RM25 billion NSS fiscal incentives announced by MIDA.

The NSS's emphasis on talent development and R&D is also notable, as covered by Focus Malaysia. As semiconductor manufacturers scale operations, demand for reliable water infrastructure will rise, creating a recurring revenue stream for companies like Resintech. Additionally, the government's RM1.2 billion investment in training 60,000 engineers, highlighted by CREST, may spur ancillary demand for industrial piping in research facilities and testing labs.

Risks and Considerations

Resintech's exposure to the semiconductor sector remains indirect, which limits its upside compared to pure-play players like Carsem or Infineon. Currency volatility and raw material costs could also pressure margins, though the company has implemented cost management measures noted by Focus Malaysia. Investors should monitor whether Resintech secures contracts with semiconductor fabs directly, as this would significantly enhance its strategic relevance.

Conclusion: A Strategic Play for Diversified Investors

Resintech Berhad is not a semiconductor company, but its role as a critical infrastructure provider positions it to benefit from Malaysia's semiconductor boom. With strong financials, operational flexibility, and alignment with national infrastructure goals, the company offers a unique angle for investors seeking exposure to the NSS without direct semiconductor stock risk. While its growth potential is capped by its indirect involvement, Resintech's low valuation and expanding market opportunities make it a compelling addition to a diversified portfolio focused on Malaysia's industrial transformation.