Scientex’s 9M16 earnings within analysts’ expectations

KUCHING: Scientex Bhd’s (Scientex) first nine months of 2016 (9M16) earnings, on the back of better sales performance achieved from both manufacturing and property segments, have come in within analysts’ expectations.

Scientex noted in a filing on Bursa Malaysia that the group’s profit before tax increased from RM144 million to RM236.4 million, an increase of 64.2 per cent.

“The increase was mainly due to better sales performance achieved from both the manufacturing and property segments,” the group said.

According to the research arm of Kenanga Investment Bank Bhd ( Kenanga Research), Scientex’s 9M16 core net profit (CNP) of RM191.4 million came in well within both its and consensus expectations at 76 per cent and 75 per cent, respectively.

As expected, an interim dividend of 12 sen was declared, which made up 39 per cent of Kenanga Research’s financial year 2016 estimate (FY16E) net dividend per share ( NDPS) of 33.8 sen.

Meanwhile, Scientex’s 9MFY16 core profit of RM186.7 million came within the research arm of TA Securities Holdings Bhd’s ( TA Research) ( 74 per cent) and consensus ( 73 per cent) estimates.

Kenanga Research noted that for the manufacturing segment, Scientex intends to add another 3.6 million metric tonnes ( MT) of PE film capacity in Rawang and Ipoh in addition to the group’s existing expansion plans.

TA Research pointed out that the on-going capacity expansions in Rawang and Ipoh plants are expected to be fully completed and operational by the second half (2H) of the year.

The new capacity is expected to contribute to 2H of 2017 (2H17) earnings which Kenanga Research has already accounted for.

“This will boost Scientex’s total capacity for its PE film to 78,000 MT per year to meet increasing demand for such products globally,” TA Research said.

For the property segment, Kenanga Research expected the on- going sector slowdown to persist in 2016 due to tighter lending policies and poor market sentiment.