Scientex business plans on track — Analysts
KUALA LUMPUR: Scientex Bhd’s (Scientex) business plans are progressing smoothly, with its property division on track to register better earnings while its plant expansion is currently in progress.
AmInvestment Bank Bhd’s research team (AmInvestment) noted that the demolition of Scientex’s automotive interior plant in Shah Alam, Selangor is currently in progress and this is part of its plans to build, on the same site, a new robotic stretch film plant (four lines in phase 1 and four more lines in another three to four years).
It said, the new plant, with an industrial stretch film capacity of 30,000 metric tonne per year, is scheduled for completion and commissioning in mid-2022.
Scientex’s property division is also on track to register better earnings in coming quarters driven by progress billings from unbilled sales that stood at RM760 million as at endOctober 2020 and RM1.6 billion new launches in FY21, comprising largely of 6,000 affordable housing units (with an average selling price of circa RM267,000 per unit) in Pulai, Johor and Durian Tunggal, Melaka.
It noted that it conservatively forecast FY21F new launches of only RM1.3 billion in gross development value (GDV).
“We continue to like Scientex for the strong prospects of the packaging industry due to consumer spending, a shift to onthe-go food and beverages due to a hectic lifestyle and higher food safety standards, its above trend earnings growth rates of 17.7 per cent and 12.6 per cent for FY21 to FY22F (compared with a weighted average of about 10 per cent annually for its global peers) due to extensive R&D, cost efficiency initiatives and an M&A pipeline, and a robust property development business despite the soft market in general thanks to its right focus on predominantly landed affordable residential units in secondary suburbs,” AmInvestment said.
It maintained its ‘buy’ recommendation on the stock.