Date: 29/11/2022
Organic expansion and M&A activities to drive growth Scientex has grown over the years and become a leading end-to-end packaging player steered by growth-oriented and experience management. Note that Scientex growth ability shall be pushed by diverse products offerings, ranging from industrial to consumer. The management is optimistic to achieve 400k MT/year capacity by FY2023 through organic expansion as well as merger and acquisition (M&A) activities. Fulfil the gap on supply-demand disequilibrium in Property market Scientex has a strong position to take a slice of affordable housing market especially in the Southern region of Peninsular Malaysia. With price offering below RM500k, the Group managed to reach a commendable take-up rate (c.75%-85%) for its housing projects. Scientex is setting its eye to develop 50k units of affordable housing by CY2028. Devoted on its products offering The Group is putting a solid effort on R&D in line with its aim to offer a well-grounded plastic packaging products to their clients. Its R&D activity is being carried out to execute clients request and requirement to ensure clients’ satisfaction. Some of its clients are comprised of multi-national companies (MNCs) such as Nestle, Pepsico as well as prominent domestic brands. As for stretch film, their key clients are the large distributors in Japan. Initiate with a BUY call with TP of RM3.88 We initiate coverage on Scientex with a BUY recommendation and TP of RM3.88 based SOP-derived valuation. We peg packaging segment PER at 12.9x (10% premium weightage average peers PE) as we expect rapid growth prospect for Scientex compared to its peers. Property segment wise, we apply a 30% discount to its property RNAV given its smallish market share and low margin housing category. Source: BIMB Securities Research - 29 Nov 2022 Labels: SCIENTX More articles on Bimb Research Highlights >>
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