|SCIENTEX (RM mil)||FY16Q1||FY15Q4||FY15Q3||FY15Q2||FY15Q1|
|Prop Dev Cost||139.8||136.5||110.5||117.0||104.0|
|Net Cash Flow||-10.9||6.9||-20.3||38.0||19.1|
Friday, 18 December 2015
Scientex: Expects FY16 Performance To "Normalise"?
Scientex FY16Q1 Financial Result
Scientex has released its latest FY16Q1 result which saw its PATAMI jumped by 100% YoY. It is yet another record high quarter in revenue and net profit by a wide margin.
The next day, The Edge website came out with this article:
After achieving its best ever financial result in FY16Q1, Scientex expects FY16 performance to "normalise".
I guess most people will straight away think that this FY16Q1 is extraordinary and non-sustainable, and it will fall back to its "normal" level in the rest of FY16.
Actually it is not, it is the other way round.
Scientex record-breaking FY15 was hit by forex loss and higher tax rate. In FY16, all these will "normalise", which means that it will have less forex loss & usual tax rate, which also means that if its sales in FY16 remain the same as in FY15, it will enjoy higher profit.
Will Scientex's FY16 sales stay the same as FY15?
Its new CPP plant (12,000MT p.a) is set to start commercial production by end-2015.
Its BOPP plant (60,000MT p.a) is 90% completed and is on track to commence operation by mid-2016.
Its 20% expansion in PE film to 74,400MT p.a is also set to be completed in mid-2016.
How much revenue can Scientex generate in its FY16? I thnik it will be more than FY15 even though those expansion may only make meaningful contribution from FY17 onward (from Aug16).
Nevertheless, net profit generated is hard to predict as there might be higher start up cost and also depreciation charge.
SGW Ipoh (Mondi) which was acquired in Aug15 contributed about RM40mil in revenue in this quarter.
Without contribution of SGW Ipoh, its manufacturing revenue and profit will still hit a record high.
It will benefit from strong USD as 70% of its products are exported.
Property division continue to do well, despite lower profit QoQ as there was a revaluation gain of RM12.6mil in previous quarter.
Unbilled sales increased to RM632.2mil at the end of FY16Q1, compared to RM585mil 3 months ago.
Scientex's CEO said that the company will allocate as much as RM460mil for capex in FY16, which include RM200mil for property division.
For comparison, the company just spent RM100mil on PPE purchase in FY15.
In the first quarter of FY16, RM117mil has already been spent for PPE purchase, which include about RM54mil in the acquisition of SGW (Mondi) Ipoh.
It has plan to expand the capacity of SGW Ipoh later in 2016, and will continue to grow its packaging division by acquisition.
Of course its cash flow is "poor" temporarily due to the aggressive expansion, and its net gearing ratio has increased to 0.24.
The CEO mentioned in The Edge that FY16 will see BETTER RESULTS and BETTER OPERATING CASH FLOW.
Its operating cash flow in FY15 was approximately RM200mil.
After the announcement of latest result, Scientex's share price surged from RM8.60 to RM9.50 in 2 days time.
Is Scientex "expensive" now?
Personally I think it is not unfair to annualise its FY16Q1 EPS of 27sen, don't you think so?