SCIENTEX'S PACKAGING BUSINESS TURNING THE CORNER - ANALYSTS

KUALA LUMPUR, March 27 (Bernama) -- 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 2.0 per cent to RM3.68 from RM3.75,” it said in a note today.

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Yesterday, Scientex reported a 32.7 per cent 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 per cent 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 (FY2024). 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 FY2024-2026 earnings forecast by 4-6 per cent. This adjustment follows an update to the property segment’s revenue to reflect the robust performance.

“The group’s valuation remains fair, with the stock trading at its historical price-earnings.

“Key downside risks include unfavourable changes in demand for flexible packaging products and affordable homes and sharp increases in raw material prices. The converse represents the upside risks,” it added.

At 11.53 am, Scientex’s share price dropped 6.0 sen to RM3.17 with 2.98 million shares traded.

-- BERNAMA