PETALING JAYA: Analysts expect a soft earnings outlook for Scientex Bhd
’s packaging segment this year due to inflationary pressures and rising energy costs.
TA Research said the outlook for the company’s packaging sector remains challenging due to rising energy costs and inflationary pressures, which continue to exert upward pressure on its operational costs.
To remain competitive in the market, the group would need to work on enhancing operational efficiency while also emphasising cost, quality and customer delivery,” the research house added.
“On the other hand, the outlook for the property segment remains promising.
“Year-to-date, Scientex has proposed new land acquisitions totaling 2,578.4 acres.
“We believe that the group will continue to further expand its land bank in the second half of financial year 2024, targeting a net gearing ratio of no more than 0.5 times (as of the third quarter of financial year 2024 (3Q24), net gearing stood at 0.2 times).
“Moving forward, we anticipate the earnings before interest and tax margin to sustain at 28%, backed by the resilient take-up rate and consistent billing progress,” it noted.
Scientex is one of the top producers of stretch film and a leading player in the flexible plastic packaging industry, as well as a reputable developer of affordable homes.
Kenanga Research said it expects a soft earnings outlook for its packaging segment due to a weak export market and high energy cost, partially cushioned by savings from a 21 megawatt peak solar photovoltaic system, which should be operational from January 2025.
On a brighter note, the brokerage said the sales of its affordable properties would continue to be robust.
Meanwhile, the company’s acquisition of land in Muar (Johor) is expected to be completed by the second half of 2024, while those in Bestari Jaya (Selangor), Seberang Perai Selatan (Penang) and Pulai (Johor) are expected to be completed in the first half of 2025.
“Its nine months financial year 2024 core net profit of RM398.6mil met expectations at 73% of both our full-year forecast and the full-year consensus estimate.
However, Scientex declared a dividend per share of six sen in 3Q24 (versus five sen in 3Q23) that exceeded our expectation,” Kenanga Research noted.
The research house is maintaining its “underperform” call on Scientex and has fine-tuned its target price by 1% to RM4 (from RM3.95).
