KUALA LUMPUR (Dec 19): Analysts expect Scientex Bhd (KL:SCIENTX) to see better earnings from the property division moving forward, which will offset any shortfall and challenges at its packaging manufacturing segment.
Scientex’s core profit after tax and minority interest of RM127.6 million was in line with BIMB Securities' in-house forecast, making up 21.9% of its full-year forecast and aligning with market expectations at 21.2%, according to a research note on Thursday. The research house currently maintains a “hold” call on Scientex with an unchanged target price of RM4.50.
“We anticipate that the company's overall performance will remain resilient, driven by sustained and robust demand for its affordable housing segment,” BIMB said.
The demand is expected to offset the challenges faced in the packaging segment, providing a “balanced growth outlook for the group”, it added.
Shares in Scientex fell 13 sen or 2.89% to RM4.37 on Thursday, marking their lowest level since Nov 21, valuing the group at RM6.88 billion.
Still, the stock has risen over 15.22% year-to-date, thanks to better performance coming from Scientex's property sale, especially its affordable properties that showed strong take-up rates.
Scientex is well covered by analysts — four have “buy” calls while the remaining four recommended “sell”. The consensus 12-month target price stands at RM4.75, offering a potential upside of 8.7% from its last traded price, according to Bloomberg data.
Separately, Kenanga Research noted that Scientex's packaging segment earnings will recover but stay "soft as the forex impact normalises and the overall demand staying muted".
"Nonetheless, expect some savings from a 21MWp solar photovoltaic system due to come into operation effective January 2025," it added.
On Wednesday, Scientex reported that its net profit for the first quarter ended Oct 31, 2024 (1QFY2025) fell 6.7% to RM128.6 million from RM137.8 million a year ago, as lower profits from the packaging segment outweighed better performance in the property division.
Revenue remained flat at RM1.11 billion, as growth in the property division was partly offset by a decline in packaging revenue due to unfavourable foreign exchange movements and softer export market demand.
TA Securities in its note also flagged that Scientex’s packaging manufacturing segment continues to face headwinds.
“However, Scientex remains committed to offering value-added, sustainable, and recyclable packaging solutions to its customers,” it noted.
“Meanwhile for its property segment, the group remains optimistic about its property segment, driven by rising demand for affordable housing, a strong land bank of 10,277 acres, and an ongoing gross development value of RM3.9 billion,” TA Securities added. The research house maintained its “buy” call on Scientex with an unchanged target price of RM5.48 per share.
On its part, Scientex is targeting to launch 8,000 affordable homes annually starting in FY2025, up from 6,300 units in FY2024. This aligns with its goal of delivering 50,000 affordable homes by 2028. To date, it has completed nearly 38,000 homes.
For its packaging segment, Scientex foresees long-term opportunities in the flexible packaging industry, supported by its ready capacity and capabilities to innovate and develop customised, value-added packaging solutions.