KUALA LUMPUR (Oct 5): AmInvestment Bank Research has maintained its ‘buy’ call on flexible plastic packaging manufacturer Scientex Bhd with a higher fair value of RM12.69 per share (from RM10.74 per share) based on sum-of-parts valuation. 

The local research house is pegging the group’s manufacturing segment to a financial year of 2022 forecast price-to-earnings (PE) of 18 times at a premium compared to its peer stretch film makers’ average forward PE of 12.5 times. 

Its analyst Jeremie Yap wrote in a note today that the valuation upgrade is premised upon the steep increase in Scientex’s market value by 22% to RM5.6 billion from RM4.6 billion in just slightly more than two weeks, as well as reflection of earnings potential from some 202 acres of landbank in Pulai under acquisition. 

“We continue to like Scientex for the strong prospects of the packaging industry as consumer spending shifts to on-the-go food and beverages due to a hectic lifestyle and higher food safety standards; its above-trend earnings growth rates of 21.6% and 13.2% for FY21F–FY22F (vs. a weighted average of about 10% annually for its global peers) due to extensive R&D, cost efficiency initiatives and an M&A pipeline,” said Yap. 

Yap added that the research house also likes Scientex due to its robust property development business despite the soft market in general, thanks to its right focus on predominantly landed affordable residential units in secondary suburbs.

“At about 12x forward earnings in its entirety, we think that this home-grown regional/global plastic packaging player is highly compelling given its strong foothold in a consumer-fuelled sector,” he noted. 

As at the time of writing, shares in Scientex had risen 1.27% or 14 sen to RM11.18, bringing its market capitalisation to RM5.78 billion. It saw some 328,000 shares traded. 

Year to date, the stock is up 18.3% from when it was trading at RM9.45 apiece.