TA Research said the group’s manufacturing segment continues to face challenges.
PETALING JAYA: Scientex Bhd
’s earnings from its packaging segment is expected to recover but remain soft as the foreign exchange impact normalises and overall demand stays muted.
Kenanga Research expects the company to see some savings from a 21 megawatt-peak solar photovoltaic system due to come into operation effective January 2025 while the sales of its affordable properties will continue to be resilient given strong take-up rates for recent launches.
The completed land buys in Muar (Johor), Kuala Selangor (Selangor), Seberang Perai (Penang) with a collective gross development value (GDV) of RM6.6bil will likely provide earnings visibility to the group in the medium term, the research house added.
For the first quarter of financial year 2025 (1Q25), Scientex’s turnover was flattish. The higher revenue from its property segment was largely offset by lower revenue from the plastic packaging segment.
Net profit declined by 6% due to tighter packaging margins while the recent ringgit firmness meant lower export prices and higher raw material costs when the ringgit was weaker, Kenanga Research noted.
TA Research said the group’s manufacturing segment continues to face challenges but Scientex remains committed to offering value-added, sustainable and recyclable packaging solutions to its customers.
TA Research retained its “buy” call on the stock with a target price (TP) of RM5.48 a share while Kenanga Research maintained its TP for the stock at RM4.15 a share with a “market perform” call.
Kenanga Research’s TP continues to value the packaging business at an unchanged 12 times financial year 2025 (FY25) price-to-earnings ratio (PE), a premium to the sector’s average forward PE of 10 times to reflect its size and leadership as one of the largest players in the region.
UOB Kay Hian Research however downgraded Scientex to a “hold” with lower TP of RM4.87 a share. The TP is based on 13 times FY25 PE, in line with its 10-year mean.
The research house lowered its FY25 to FY27 earnings for Scientex by 4% to 5% upon factoring in weaker demand and lower margins for the manufacturing segment.
The property division will be the main driver for earnings. The GDV of Scientex’s current ongoing projects total RM3.9bil, providing a solid earnings base for the segment.
The group was previously targeting RM1.3bil in land acquisitions with a total GDV of RM30bil.
BIMB Securities Research maintains its “hold” call on the stock with a TP of RM4.50 a share as it believes Scientex’s performance will be driven by organic expansion and mergers and acquisitions activities for potential long-term growth.
It also has a strong position as an affordable housing developer and is commitment to sustainability and the environment through its plastic product offerings.
