PETALING JAYA: Scientex Bhd ’s performance for the second half of its financial year 2024 (2H24) is expected to come in better in anticipation of returning demand for consumer packaging as customers stock up on their inventory.
On the property side, RHB Research is optimistic that Scientex is on track to achieve its property launch of RM2bil for FY24.
As such, it expects “the property segment to be the main earnings contributor in the coming quarters”.
The manufacturer of flexible plastic packaging’s net profit for the second quarter (2Q) of financial year 2024 (FY24) rose 24% year-on-year (y-o-y) to RM132.1mil, bringing 1H24 core earnings to RM270.3mil.
This, RHB Research said, was in line with the firm’s and consensus estimates at 49%.
The operating profit of its packaging segment rose 10% y-o-y in 2Q24 despite a 3% decline in revenue. This was mainly due to a better product mix during the period as well as improved cost control.
Revenue for its property segment increased 41% in 2Q24 amid steady progress billings from ongoing projects and robust demand from new launches.
As a result, Scientex managed to launch RM657mil worth of properties in 1H24.
“Although this makes up only 33% of FY23 property launch of RM2bil, the group is optimistic that it would be able to achieve higher property launch on the back of upcoming launches in the central and southern regions.
“Demand for affordable homes remains healthy as reflected in the 60% take-up rate for its new launches in 1H24. As such, we continue to expect the property segment to be the main earnings driver in FY24.”
However, RHB Research is keeping a “neutral” call on the stock with a target price of RM3.85. It said the stock is fairly valued and trading at 10.5 times, which was in line with its historical mean of 11 times.
Meanwhile, post-results briefing with the company, Kenanga Research said Scientex is seeing a gradual improvement in customer orders in recent months.
This is fuelled by industrial packaging which caters to the logistics and shipping sectors.
The company also recently completed the installation of its second solar photovoltaic at its Klang plant and has realised about 10% savings on its energy costs for that plant as well as its Chemor plant.