Scientex outlook positive amid economic recovery

KUALA LUMPUR: Analysts are positive on the prospects of Scientex Bhd amid the swift recovery of the global economy and consumer sentiment.

Citing potential resilient earnings from the company’s property and packaging segments in the coming quarters, several brokerages continue to keep their “buy” calls on Scientex.

In the third quarter ended April 30, 2021 (Q3’21), Scientex posted close to a 60% year-on-year jump in net profit to RM109.9mil on the back of high quarterly revenue of RM976.8mil

For its property segment, the group planned to launch 6, 000 property units through 24 launches worth RM1.6bil within the financial year ending July 31, 2021 (FY21), to deliver 50, 000 units by 2028.

As its property segment is likely to anchor the group’s future growth, UOB Kay Hian Research said Scientex would record growth in the second half of financial year 2021 on the back of keeping prices low with above 60% of its affordable housing units priced below RM200, 000.

The research house added that the resilient growth would also be driven by aggressive land bank acquisition with lower-than-market costs as well as the standardisation of designs which allows the group to launch projects within one year from the signing of the sales and purchase agreements and the completion of projects within 18 months.

“We continue to like the stock for its strong management team and track record, which will enable the group to deliver record annual results year after year.

“With Scientex’s Vision 2028 aim remaining intact, we believe that the group will be able to continue its growth impetus moving forward, ” it noted.

On its plastic packaging industry, UOB Kay Hian said there was a potential to deliver robust growth in the segment due to the better sales mix of value added products which would sustain profit margins at 8% to 10% from the previous 6% to 8%.

Meanwhile, Kenanga Research expected the average selling prices (ASPs) of plastics to decline in line with resin prices and for plastics volumes to rise in the near-term.

“As resin prices are gradually trending down, we suspect that ASPs will be falling at a slower rate, thus expect marginal plastics manufacturing margin expansion in the near-term, ” it said.

Kenanga Research maintained a “market perform” call with a higher sum-of-the-parts-derived target price of RM3.80 from RM3.70 as it rolled forward the valuation base of FY22.

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