No Surprise In Scientex's FY14Q1

Scientex FY14Q1 Financial Result

SCIENTEX	FY14Q1	FY13Q4	FY13Q3	FY13Q2	FY13Q1	FY12Q4
Revenue	364.8	371.2	345.1	271.1	241.6	226.0
PBT	37.8	40.2	38.2	33.2	25.3	29.5
PBT%	10.4	10.9	11.1	12.2	10.5	13.1
PAT	29.3	30.3	29.5	25.6	24.9	23.4
Manu Rev	289.2	277.4	275.3	193.5	172.6	166.8
Manu OP	17.7	20.6	16.7	11.1	10.4	9.9
Prop Rev	75.6	93.8	69.8	77.6	69.0	59.2
Prop OP	22.2	31.4	23.3	23.0	21.0	19.4
Total Equity	635.9	628.7	584.8	557.2	550.1	525.7
Total Assets	1263.1	1286.4	1180.9	1172.2	827.6	809.0
T/ Receivables	209.7	195.5	211.1	194.3	145.7	127.4
Inventories	86	80.7	73.5	92.5	49.6	61.0
Cash	91.2	152.2	58.6	50.8	50.0	36.3
Pdev Cost	57.5	68.5	56.4	52.8	63.5	71.1
Total Liab	606.8	637.7	577.6	577.3	243.2	249.3
T/ Payables	229.4	258.4	221.3	212.3	153.7	155.6
ST Borrow	167.9	167.6	143.8	126.0	46.8	50.7
LT Borrow	164.3	167.8	168.4	196.3	3.8	5.0
Net CF	-61	115.8	22.3	14.5	13.7	-4.4
Operation	13.5	209.7	131.4	79.4	37.7	108.7
Investment	-54.1	-345.0	-325.2	-293.4	-18.6	-91.1
Financing	-20.4	251.2	216.1	228.5	-5.5	-22.0
EPS	13.27	13.80	13.73	11.90	11.60	10.88
NAS	2.88	2.84	2.72	2.59	2.56	2.44
D/E Ratio	0.38	0.29	0.43	0.49	0.00	0.04

As expected, it is not easy for Scientex to beat its previous record-breaking quarter's financial result, as it is still in the midst of expanding its manufacturing capacity.

For FY14Q1, Scientex's revenue falls only 1.7% short QoQ from RM371.2mil to RM346.8mil, while its net profit also drops 1.7% QoQ from RM30.3mil to RM29.8mil.

If compared to corresponding quarter of preceding year, the significant increase in revenue and profit is mainly due to the contribution from the newly acquired Great Wall Plastic.

Scientex's total operating profit (OP) in FY13Q4 seems to be much higher at RM52mil compared to FY14Q1 and FY13Q3. Actually there is a foreign exchange difference in its OP in FY13Q4. Without this, its total OP for FY13Q4 is RM40.5mil.

Scientex's cash level drops RM61mil from RM152mil in the preceding quarter to RM91mil in current quarter, largely due to RM55mil spent in the purchase of land for development, property, plant & equipment and acquisition of subsidiary.

Scientex is on target with its expansion plan. It has recently completed the installation of 3 cast stretch film lines, and the new blown film lines should be ready by mid 2014. Its property segment has done decently well with projects in Senai, Kulai, Skudai, Pasir Gudang & Ayer Keroh.

The proposed acquisition of Seacera Polyfilms for RM40mil is only expected to be completed before current FY ending July 2014.

My own target price for Scientex after its FY2014 is RM6.26, which is base on net profit forecast of RM120mil and PE 12x for its growth potential and over a billion market cap.

Thus, I shall continue to hold this stock, and hope that its manufacturing arm will achieve satisfactory growth in this FY2014.