Highlights
1HFY12 results in line Scientex Bhd's (Scientex) 1HFY12 results were within our expectations but slightly below consensus estimates. Operating profit of RM52.5m accounted for about 53.9% of our full year target and 40.3% of consensus' expectation while revenue of RM428.3m clocked in at 53.3% of our full year estimate and 41.3% of street's estimate. 1H sales rose 7.7% on the back of a combined 14% increase in sales for both stretch film and PP strapping band. Its export sales registered 11% increase YoY during 1HFY12, thanks to higher demand from the Asia Pacific region. Property division posted a 24.8% increase in 1H revenue to RM125.8m. Its Taman Mutiara Mas project in Kulai remains as its core revenue generator for its property division, accounted for over 40% of contribution in total revenue generated from property business in 1HFY12.

On a yearly basis, 2Q net profit rose 5.6% to RM20.2m, on the back of a 10.1% increase in revenue. 2Q revenue was relatively flat on a quarterly basis, and PBT dipped 1.7% QoQ to RM25.8m ' marginally impacted by the rise in depreciation.

Unbilled sales of RM115m As at end of January 2012, the group-wide unbilled sales stood at RM115m from its 4 core property projects. Sales in Taman Mutiara Mas project remains encouraging, given its strategic location.

Target price of RM2.99 We are maintaining our BUY recommendation on Scientex with an unchanged target price of RM2.99 based on sumof-parts valuation. Valuation wise, the group is still trading at single-digit PE of 5.7x and 5.3x for FY12 and FY13. We look forward for its EVA plant tocommence operation in 3Q this year as a potential catalyst to boost its earnings over the long run.

Source:Jupiter Securities Research 22 March 2012