Scientex’s packaging business turning the corner: Analyst Ringgit retreats on caution ahead of US inflation data

KUALA LUMPUR: Kenanga Investment Bank Bhd expects a gradual improvement in Scientex Bhd’s packaging segment on the recovery of manufacturing activities and global consumer spending.

It said Scientex is poised to capitalise on the strong demand for affordable housing following the acquisitions of land in Muar (Johor) and Bestari Jaya (Selangor) which are expected to be completed by the second half (2H) of 2024 and 1H 2025 respectively, which will sustain its project pipeline.

“We maintain our forecasts but fine-tune down our target price (TP) by 2% to RM3.68 from RM3.75,” it said in a note yesterday.

Yesterday, Scientex reported a 32.7% rise in net profit to RM141.01 million for the second quarter ended Jan 31, 2024, from RM106.29 million in the same quarter last year. Revenue increased by 11.7% to RM1.09 billion compared with RM978.39 million previously.

Meanwhile, RHB Investment Bank Bhd (RHB IB) said the company’s 2H 2024 performance is expected to be better in anticipation of returning demand for consumer packaging as customers will stock up on their inventory.

“On the property side, we are optimistic that Scientex is on track to achieve its property launch of RM2 billion for the financial year 2024 (FY24). As such, we continue to expect the property segment to be the main earnings contributor in the coming quarters,” it said.

RHB IB maintains a “Neutral” call on the stock with TP of RM3.85, up from RM3.75, after revising its FY24-26 earnings forecast by 46%. This adjustment follows an update to the property segment’s revenue to reflect the robust performance. – Bernama

THE ringgit retreated to close lower against the US dollar yesterday, snapping two consecutive days of gains on caution ahead of US inflation data.

The US Personal Consumption Expenditures (PCE) price index will be out tomorrow, which will further provide clarity on the interest rate outlook in the US.

At 6pm, the ringgit slid to 4.7320/7370 against the greenback from Tuesday’s close of 4.7109/7220.

Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said market players appeared to be taking shelter against the uncertainty ahead of the PCE data, with the local note and other regional currencies generally weaker against the greenback.

“The weaker yen was also in the limelight as the Japanese finance ministry issued a warning of possible intervention in the forex market. This happened despite the Bank of Japan’s decision last week to end the negative interest rate policy, the yield curve control and purchases of risk assets. All in all, it seems like risk-off mode at the moment,” he told Bernama.

At the close, the ringgit was traded weaker against a basket of major currencies.

It depreciated against the euro to 5.1233/1287 from Tuesday’s close of 5.1225/1257 and against the British pound to 5.9742/9805 from 5.9733/9771. The ringgit was also lower vis-a-vis the Japanese yen at 3.1261/1298 from 3.1194/1216 on Tuesday.

The ringgit traded mixed against Asean currencies.

It was flat against the Singapore dollar at 3.5112/5151 from 3.5112/5137 and against the Philippine peso, declining to 8.41/8.43 from 8.38/8.38 previously.