Highlights

Scientex - Too Big To Ignore

Date: 05/10/2020

Source  :  AmInvest
Stock  :  SCIENTX       Price Target  :  12.69      |      Price Call  :  BUY
        Last Price  :  11.90      |      Upside/Downside  :  +0.79 (6.64%)
 


Investment Highlights

  • We maintain our BUY call and forecasts, but increase our fair value by 18% to RM12.69/share (from RM10.74/share previously) for Scientex based on sum-of-parts (SOP) valuation (Exhibit 1). We now peg its manufacturing segment to an FY22F PE of 18x (from 15x), at a premium compared to its peer stretch film makers’ average forward PE of 12.5x, to reflect its higher EPS growth rates of 21.6% and 13.2% in FY21–22F (vs. a weighted average of about 10% annually for its global peers).
  • Our valuation upgrade is premised upon:

    1. The steep increase in Scientex’s market value since our coverage initiation on 17 Sep 2020, i.e. by a whopping 22% to RM5.6bil from RM4.6bil in just slightly more than two weeks (in part, we believe, also driven by investors’ excitement over the bonus and free warrant issues proposed on 18 Sept 2020). Scientex’s higher market value makes it a lot more investible to large institutional investors, prompting us to raise our target forward PE for its manufacturing segment to 18x (from 15x); and

    2. It is also a reflection of earnings potential from some 202 acres of landbank in Pulai under acquisition (announced on 21 Sept 2020). Based on our estimates (using Sceintex’s existing Pulai Mutiara project as a guide), the land should fetch a GDV of RM1.6bil, translating to a net present value (NPV) of RM265mil assuming a net margin of 24%.
  • We continue to like Scientex for: (1) the strong prospects of the packaging industry as consumer spending shifts to on-the-go food and beverages due to a hectic lifestyle and higher food safety standards; (2) its above-trend earnings growth rates of 21.6% and 13.2% for FY21–22F (vs. a weighted average of about 10% annually for its global peers) due to extensive R&D, cost efficiency initiatives and an M&A pipeline; and (3) a robust property development business despite the soft market in general thanks to its right focus on predominantly landed affordable residential units in secondary suburbs.
  • At about 12x forward earnings in its entirety, we think that this home-grown regional/global plastic packaging player is highly compelling given its strong foothold in a consumer-fuelled sector.

Source: AmInvest Research - 5 Oct 2020

Share this
Labels: SCIENTX

Related Stocks

Chart Stock Name Last Change Volume 
SCIENTX 11.90 +0.08 (0.68%) 951,400 

  Be the first to like this.
 


APPS
I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
View candlestick stock charts with Technical indicators
MQ Affiliate
Be rewarded by being an MQ Affiliate
 
 

558  569  568  475 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 AT 0.200.00 
 YTL 0.645-0.005 
 SAPNRG 0.1150.00 
 KANGER 0.18-0.005 
 HIAPTEK 0.28+0.025 
 TDM 0.305+0.04 
 VIVOCOM 1.14+0.13 
 HIAPTEK-WB 0.065+0.02 
 FOCUS 0.67+0.015 
 BINTAI 0.82+0.025 

FEATURED POSTS

1. The Equity Market Index Benchmark in Malaysia CMS
2. Trading Scenarios of Derivatives Bursa Derivatives Education Series
3. Derivatives 101 Bursa Derivatives Education Series
4. Why Trade FKLI? Bursa Derivatives Education Series
5. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!
PARTNERS & BROKERS