Scientex’s 1Q earnings rise on higher sales

The group’s manufacturing revenue climbs 13.9% YoY to RM655m due to higher utilisation rate of its manufacturing plants

By S BIRRUNTHA / Pic By scientex.com.my

SCIENTEX Bhd’s higher sales of packaging products and properties saw earnings for its first financial quarter ended Oct 31, 2019 (1Q19), rise 50.9% year-on-year (YoY) to RM80.96 million.

Revenue for the quarter grew 22.9% YoY to RM877.37 million, while earnings per share for the period amounted to 15.71 sen.

In a Bursa Malaysia filing yesterday, Scientex said its manufacturing revenue increased 13.9% YoY to RM655.9 million in the quarter due to a higher utilisation rate of its manufacturing plants and the contribution from the group’s newly acquired converting business.

Revenue from its property business increased 60.7% YoY to RM221.5 million for the quarter on better sales and steady progress billings from its development projects in Johor, Melaka and Selangor.

The group expects the next financial year to be relatively stable for its manufacturing division, which continues to see sustainable demand for its flexible plastic packaging (FPP) products.

This includes its FPP converting segment with the acquisition of Daibochi Bhd in April 2019 and Daibochi’s recent acquisition of Mega Printing and Packaging Sdn Bhd in August 2019.

Scientex’s entry into the US enables it to push its global agenda of expansion into the untapped American market.

Its property segment expects to see demand for its product offering to remain relatively strong for the coming financial year despite the soft property market conditions in the country. It added that demand for its affordable housing products throughout Peninsular Malaysia continues to drive the performance of the group.

Scientex’s purchase of land in Tasek Gelugor in Penang and Kundang in Selangor are expected to be completed this month, with scheduled launches in the first half of 2020 as part of its affordable housing strategy.

The Tasek Gelugor land buy would see Scientex’s expansion of its affordable housing footprint to the northern market, particularly mainland Penang.

Scientex, in a separate exchange filing yesterday, stated that it is buying 18 parcels of leasehold agriculture land in Kota Tinggi, Johor, from Fiamma Holdings Bhd for RM39.21 million to be developed into a mixed property development.

The 85.73 acres (34.69ha) of land is situated less than 5km from Kota Tinggi town and 25km to Johor Baru city.

“It is currently too preliminary to ascertain the exact total gross development value, development cost, the expected commencement and completion dates of the development,” the group said.

Scientex said the proposed acquisition will be funded with internal funds and bank borrowings.

Scientex shares fell 27 sen or 2.76% to RM9.53 yesterday, valuing the company at RM4.9 billion.