Scientex Berhad - Big Bro in Flexible Packaging

 

Company : Scientex Berhad   

Business:

Manufacture and sales of stretch film and flexible packaging as well as building affordable houses in Malaysia. The company has vision to double the revenue in every five years. So far they doing well to achieve the mission.

Company is in the list of Asia’s 200 best company under a billion by Forbes.

 

 

 

Clear strategy to grow the company and revenue is rising every year.

 

Packaging Division:

Year 2020 has produced 295,000 metric tonnes with 18 new extrusion machines. The nearest peer is Thong Guan who capacity of 150,000 metric tonnes.

 

Factory and sales office location. Products are mainly for export market.

 

 

Property Division:

 

Below is the housing project locations. Quite a few located in Johor. Overall, affordable houses (landed property) enjoy very good take up rate.

 

Latest result:

Q4 seems picking up but Q1 2022 will be affected by FMCO. Property division is doing well despite challenging environment due to various MCO imposed. However, the packaging division revenue is lower which is a surprise as other packaging companies like BPPLAS and Thong Guan are doing well. The main cause is the consumer-based packaging is affected (such as retail). It seems that Stretch Film is performing very well across the whole packaging industry.

 

Cash flow

Cash flow from operation is very strong and bulk of the money is used to purchase lands for future development.

 

Prospect:

• Acquired Daibochi Berhad which has present in Myanmar (Export from Myanmar to EU has lower import duty).
• Open up retail sector that will spur their consumer packaging sales.
• Continuation of land acquisitions in various states such as Johor, Penang and Selangor.
• Very strong take-up rate of affordable houses in Penang, Melaka and Selangor.

 

 

Dividen is stable but not very attractive (lower than bank FD ! ). Company needs money for expansion (buying land and acquire companies).

 

Technical Analysis on Chart:

 

Since bonus issue in Dec 2020, the price has been sleeping. Don’t see any speculation on this counter. Big company is very difficult to move. Hence it is a long long term investment. At time of writing, I don’t have Scientex share yet.