KUALA LUMPUR: Techbond Group Bhd expects the cost of vinyl acetate monomer to rise between five and 10 per cent compared to pre-conflict levels from oil price shocks.

According to RHB Research, a five per cent increase in raw material costs could shrink the company's gross profit margin by one per cent in financial year 2026 (FY26) and a further three per cent between FY27 and FY28.

However, the company said it has sufficient stocks to last up to nine months, which should support its profit margin in the near term.

"We expect margins to normalise from the fourth quarter, as the stockpile is progressively depleted on higher spot prices. A spike in revenue is anticipated in the second half, as customers stock up on orders with logistics costs passed through," RHB Research said in a note.

The group's packaging unit, which accounts for 25 per cent of its revenue, is expected to further expand with the deliberate shift away from the woodworking segment.

Given the heightened geopolitical risks and volatility in energy prices, RHB Research lowered its target price-to-earnings for the company to 13 times from 14.5 times previously.

RHB Research also lowered its earnings estimates for the company by 8.6 per cent and 13.1 per cent to reflect a two per cent material cost increase.

The firm maintained a "Buy" call on the stock with a lower target price of 37 sen.