Scientex’s  9MFY14  core  earnings  of  MYR100.2m  were  within  our  and consensus  estimates,  at  69.9%  and  68.6%  of  the  respective  full  year forecasts,  as  we  take  into  account  the  group’s  historically  strong performance  in  the  fourth  quarter.  With  this  in  mind,  we  make  no changes  to  our  forecasts  at  this  juncture.  Maintain  BUY recommendation and our SOP based FV of MYR7.19.

• In  line  with  expectations.  Scientex’s  9MFY14  revenue  of MYR1,175.1m  (+37.0%  y-o-y)  comprised  the  following  contributions:  i) MYR894.9m from its manufacturing segment (+39.5% y-o-y, 76% of total revenue),  and  ii)  MYR280.2m  from  its  property  development  segment (+29.5%  y-o-y,  24%  of  total  revenue).  The  higher  turnover  from  the company’s  manufacturing segment was due to increased demand for its stretch film products,  as well as higher contributions  from its consumer packaging  segment.  Meanwhile,  the  better  performance  of  Scientex’s property development segment was attributed to the maiden contribution from its Taman Scientex Senai project,  as well as continued demand for the group’s launches in Pasir Gudang, Kulai, Johor Bahru and Melaka. Overall, Scientex’s  9MFY14 core earnings of MYR100.2m  were  28.4% higher  y-o-y,  making  up  69.9%  and  68.2%  of  our  and  consensus estimates respectively.
• Declares  DPS  of  8.0  sen.  Management  has  declared  an  interim  DPS (dividend  per  share)  of  8.0  sen. We  expect  the  company  to  declare  a final DPS of 19.0 sen  following the release of its 4QFY14 results,  based on  its policy of paying a  minimum  30%  of earnings as dividend.  Its net gearing currently stands at a relatively sturdy 0.41x.
• Maintain BUY.  As Scientex’s 9MFY14 results  were  largely in line with our  expectations,  on  taking  into  account  the  historically  stronger performance in its  fourth quarter, we make no changes to our estimates at this point in time. We reiterate our BUY recommendation on the stock,with our SOP based FV kept at MYR7.19. We continue to like Scientex’s: i) fast-expanding plastic film manufacturing segment, ii) reputable brand name  in  the  property  market  in  Malaysia’s  southern  region,  and  iii) committed management team under the founding Lim family. 

Source: RHB