Scientex's Best Ever Quarter!

Scientex FY14Q2 Financial Result

SCIENTEX (RM mil)	FY14Q2	FY14Q1	FY13Q4	FY13Q3	FY13Q2
Revenue	383.5	364.8	371.2	345.1	271.1
PBT	44.4	37.8	40.2	38.2	33.2
PBT%	11.6	10.4	10.9	11.1	12.2
PAT	33.9	29.3	30.3	29.5	25.6
Manu Rev	288.5	289.2	277.4	275.3	193.5
Manu OP	15.9	17.7	20.6	16.7	11.1
Prop Rev	95.0	75.6	93.8	69.8	77.6
Prop OP	29.3	22.2	31.4	23.3	23.0
Total Equity	649.9	635.9	628.7	584.8	557.2
Total Assets	1304.4	1263.1	1286.4	1180.9	1172.2
Trade Receivables	251.7	209.7	195.5	211.1	194.3
Inventories	76.3	86.0	80.7	73.5	92.5
Cash	89.3	91.2	152.2	58.6	50.8
Prop Dev Cost	74.4	57.5	68.5	56.4	52.8
Total Liabilities	633.3	606.8	637.7	577.6	577.3
Trade Payables	214.2	229.4	258.4	221.3	212.3
ST Borrowings	205.8	167.9	167.6	143.8	126.0
LT Borrowings	163.7	164.3	167.8	168.4	196.3
Net Cash Flow	-62.9	-61.0	115.8	22.3	14.5
Operation	30.9	13.5	209.7	131.4	79.4
Investment	-67.0	-54.1	-345.0	-325.2	-293.4
Financing	-26.8	-20.4	251.2	216.1	228.5
EPS	15.34	13.27	13.80	13.73	11.90
NAS	2.94	2.88	2.84	2.72	2.59
D/E Ratio	0.43	0.38	0.29	0.43	0.49

Scientex latest financial performance is better than what I expect.

Its quarterly revenue and net profit of RM383.5mil and RM33.9mil respectively, are 41% and 32% better than the corresponding quarter a year ago.

In fact, it is the highest revenue, profit before and after tax Scientex has ever achieved in its history.

This record-breaking feat in current quarter is helped by better contribution from its property arm, while manufacturing segment remains flat.

However, I expect its manufacturing segment to contribute more in the future from higher demand of its products and increase in production capacity.

       MD: Mr Lim Peng Jin

Scientex has completed the acquisition of Seacera Polyfilms on 13 Feb 2014. However, its immediate contribution to Scientex's bottom line is expected to be small. I will be happy if it can give a net profit of RM1mil in its first year.

Other than this, Scientex's expansion plan is largely on track in which its 50% capacity upgrade in blown film lines is expected to be fully operational by mid 2014.

As at 31 Jan 2014, Scientex's borrowings has increased RM37.3mil while cash level falls slightly compared to 3 months earlier. Thus, net debt/equity ratio increases to 0.43 from 0.38 earlier.

This is not a worry because traditionally Scientex is capable of generating strong operation cash flow.

       The Heights Residence, Malacca

With first half net profit of RM63.3mil, I'll keep my previous target price of RM6.26 base on FY14 full year net profit of RM120mil and PE of 12x.

Scientex has updated and improved its official website. Nice one indeed.

Looking at the quality of its current and future property development, which are very attractive and presentable, I think Scientex will not have much problem selling them even in the time of property market slowdown.

The Heights Residence, the first of total 6 blocks of condominiums in Malacca launched late last year, is said to achieve excellent sales. The project is within walking distance from MMU and thus should be a hot project. 

Even though the potential upside of its share price seems limited to me, I'll still hold Scientex's shares just to be part of this great growing company, apart from enjoying its decent dividend.

Some photos of Scientex Skudai development: