Scientex among top gainers on positive outlook

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KUALA LUMPUR (Sept 30): Shares of Scientex Bhd advanced at late morning on Thursday after SJ Securities Research maintained its Overweight rating on Scientex at RM7.26 with a higher target price of RM8.39 (from RM7.07) after the company’s revenue grew 12% year-on-year (y-o-y) to RM415.4 million mainly driven by manufacturing segment which increased by RM297.3 million.

At 11.47am, Scientex gained 1.38% or 10 sen to RM7.36 with 206,000 shares traded.

In a note Tuesday, the research house said Scientex’s property segment saw an increase of RM118.1 million (+25.8%), adding that EPS shot up 60% y-o-y to 22 sen in Q4.

SJ Securities said that for 12MFY14, Scientex’s revenue continued to break previous record high of RM1.23 billion, registering a 29% jump to RM1.59 billion.

It said full year net profit increased by 35% y-oy to RM151.5 million, 5% above of its earlier FY14 estimates, adding that net margin stayed in line at 9.5%.

“We raise our target price from RM7.07 to RM8.39 using SOP method, based on our revised FY15 earnings forecast.

“For manufacturing segment, we slightly raise our earnings forecast by 1.5% to RM95.2 million as we increase the expected production capacity for consumer packaging from 51,000MT to 54,000MT for FY15. To recap, there will be a total 2 new PE film production lines coming in by October 2014 and February 2015,” it said.

Going forward, SJ Securities said it expects Scientex’s affordable housing projects continue to receive encouraging response amid government’s property cooling measures.

“The Management is confident to deliver 15 new launches in FY15 with the GDV of RM550 million, about 7% lower than FY14, but 3% higher than in FY13 of RM535 million.

“The high current unbilled sales of RM537.4 million (+74% vs FY13) will continue to provide earnings visibility for this segment in the next 1-2 years,” it said.