PETALING JAYA: Scientex Bhd
’s property segment is expected to remain robust, supported by the stabilised overnight policy rate and escalating housing demand in city areas.
TA Research said in a report the company is one of the key affordable housing builders in the country.
“In the first quarter of its 2024 financial year (1Q24), the take-up rate for Scientex’s new launches was circa 40%.
“We believe that the take-up rate will improve, along with other new projects in the pipeline, backed by its track record. Its historical take-up rate was circa 80%.”
In 1Q24, Scientex registered a net profit of RM137.84mil, up from RM107.18mil, which brought its earnings per share higher to 8.89 sen from 6.91 sen previously.
The group’s revenue was RM1.11bil, up from RM1.03bil in the same quarter in 2022.
The group, which has been experiencing slowing global market demand due to inflationary pressures as well as rising interest rates and energy costs, said it will remain focused on its operational efficiency.
Despite the company’s cautious stance on its prospects, TA Research believes that headwinds could be at a tail-end.
This, the research house said, can be seen from the moderate quarter-on-quarter performance pick-up in Scientex’s manufacturing division.
“To recap, the demand was dampened in previous quarters, underpinned by clients’ overstocking that stemmed from the supply chain disruptions during the pandemic.
“That said, we believe the stocking issue has been dissipating and demand will start to normalise to pre-pandemic levels gradually, following the easing of global economic uncertainties.”
Additionally, TA Research said Scientex has identified potentials in various targeted products, particularly for liquid and paste packaging.
“Hence, the group has expanded its capacity from 450,000 tonnes to 510,000 tonnes to seize new opportunities.”
Meanwhile, Kenanga Research anticipates softer growth in the short term for Scientex’s packaging segment, as it was dragged down largely by consumer packaging (versus industrial packaging) amid a slowing global economy.
“However, this is partially mitigated by the robust demand for its new affordable housing launches with a strong take-up rate of over 80%.
“The acquisitions of land in Jenjarom, Selangor, as well as Kulai and Tebrau, Johor, are expected to be completed by mid-2024, which will sustain its project pipeline.”
The research house said it liked Scientex for its competitiveness in the global plastic packaging industry, given its size and low cost structure.
Kenanga Research added that the company also has a strong foothold in the affordable housing segment in Johor.
“However, its plastic packaging business is likely to remain in the doldrums over the near term, on the back of the slowdown in the global economy.”
