BIMB Research said it believes the company’s overall performance would be offset by consistent and robust demand for its affordable housing.
PETALING JAYA: Analysts are cautiously optimistic on the near-term outlook of Scientex Bhd
amid a challenging business environment.
BIMB Research said despite the challenging performance in Scientex’s packaging division, it believes the company’s overall performance would be offset by consistent and robust demand for its affordable housing.
“We maintain a ‘hold’ call on Scientex, with a higher target price of RM4.50 (from RM4.15 previously) as we rolled over our valuation to financial year 2026 (FY26), based on the sum-of-parts (SOP) valuation.
“Overall, we favour Scientex for its organic expansion and mergers and acquisition activities for potential long-term growth, strong position as an affordable housing developer, and high commitment to sustainability and the environment through its plastic product offerings,” the research house noted.
For the fourth quarter ended July 31, 2024 (4Q24), the global packaging manufacturer and property developer’s net profit rose by 18.2% year-on-year (y-o-y) to RM135.9mil or an earnings per share of 8.76 sen. The group also posted a 9% y-o-y increase in its revenue to RM1.17bil.
For FY24, Scientex’s net profit increased by 24% y-o-y to RM545.2mil. Revenue also rose by almost 10% y-o-y to RM4.48bil.
CIMB Securities said it is maintaining its “buy” call with a slightly higher target price at RM5.25, as it rolls forward the valuation base to 2026.
Post-4Q24 results, the brokerage said it is cutting FY25 and FY26 forecasts core earnings per share (EPS) by 6.4% and 3.2% mainly to account for lower earnings before interest and taxes margin assumptions for its property segment amid rising construction costs.
“We also introduce our FY27 earnings estimates. Overall, we project a three-year core EPS compounded annual growth rate of 8.3%, driven mainly by new property launches, alongside a gradual demand recovery from the packaging segment.
“Despite the earnings cut, our SOP-based target price is raised to RM5.25 as we roll forward our valuation base to FY26.
“Downside risks include weaker-than-expected take-up rate for its property projects and weaker-than-expected sales demand recovery for its packaging products.”
