Posted by soojinhou > 2015-10-06 07:01 | Report Abuse

I would love to buy a company like Scientex, but dislike the fact that property development now contributes the majority of the profit instead of their plastic division. It would be so much more appealing if property is not their core business.

Posted by limayseng > 2015-10-06 07:34 | Report Abuse

I like the way Scientx going about their businesses , though property section makes much of the income compared with plastics but atlas , the mix is to their advantage ; making more monies than ever ! Who said , property sector is bad ? the point is they are focusing on building low cost , medium cost and affordable housing contrary to the other property developers . even though making less margin along the way but nevertheless contributing more to the overall profit . Like it or not , this co ever since its inception , never once making a loss. this is a real feat in Bursa. Its price had once been in the 1.50 level but now already 7.40...and is improving every year ! It will be a time it may hit more than RM 10.00 for a near term...I am very confident about that. Forget about the Economic and financial jargons like CFFO and FCF . Even without those knowledge , we can still make a good judgement on Scientx.

06/10/2015 07:33



limayseng

Posted by fattycat > 2015-10-06 07:52 | Report Abuse

Sorry kcchongnz , fcf/ic ,how to count ic(invested capital) actually? I mean from which part we can find the amount ? Pls guide ^^ thanks

Posted by kcchongnz > 2015-10-06 08:40 | Report Abuse

Posted by fattycat > Oct 6, 2015 07:52 AM | Report Abuse
Sorry kcchongnz , fcf/ic ,how to count ic(invested capital) actually? I mean from which part we can find the amount ? Pls guide ^^ thanks

You can't "find the amount" anywhere. You have to estimate it. Here is a way of estimating IC.

IC = Fixed Assets + Net Working Capital

Posted by calvintaneng > 2015-10-06 09:29 | Report Abuse

ANOTHER EXCELLENT WRITE UP BY KCCHONGNZ.
Scientex was recommended Dr. Neoh Soon Kean in his monthly digest when it was around Rm1.70. At that time I tought property sales in Iskandar was no good. To my surprise I discovered the modus operandi of Scientex as a par excellence developer. By then price has already shot past Rm6.00

What are the strengths of Scientex as a property player?

I think these reasons stand out:

1. Scietex knows the market very well. In Tmn Scientex, Pasir Gudang they only built affordable 2 Storey medium cost houses 16x60 feet which sells for around rm120k. These were well received by the market. As property prices boomed they raised price gradually to Rm138k, then Rm168k. At the good response they added half a floor to make it 2 1/2 Storey houses and raised price to RM228K, THEN TO RM248K AND FUTHER TO RM288K. THE GRADUAL INCREASE IN PRICES WITH ADDED VALUE LIKE MORE FEATURES AND BALCONIES DREW IN INCREASING SALES, TRANSLATING INTO HIGHER PROFITS OVERALL.

I noticed that SCIENTEX also used cement bricks instead of red clay bricks for all their houses. These cement bricks retail at half the price a piece only 24 cents compared to red clay bricks at 48 cents a piece.

Scientex went further and manufactured their own cement bricks and further cutting costs to below 12 cents a piece. SO PROFITS EXPLODED UPWARD.

In SKUDAI GELANG PATAH SCIENCTEX COPIED THE WELL KNOWN NAME OF TAMAN MUTIARA RINI BY BOUSTEAD AND CALLED THEIR DEVELOPMENT TMN MUTIARA MAS, TO THE DISPLEASURE OF TMN MUTIARA RINI SALES STAFF.

AND HERE SCIENCE IS BUILDING HIGHER END CLUSTER AND SEMI D HOUSES TO CATER FOR THE MORE AFFLUENT CHINESE POPULATIONS. I FIND THEIR CLUSTER HOUSE DESIGNS TO BE OF SUPERIOR QUALITY. ONLY ECOWORLD CLUSTER HOUSES CAN MATCH THEM IN QUALITY AND DESIGN.

NO WONDER SCIENTEX HOUSES IN TMN MUTIRA MAS SOLD LIKE HOT CAKES.

AS THE FACTORIES OF SENAI AND KULAI BOOMED SCIENTEX STARTED TO BUILD HOUSES IN TMN SCIENTEX, KULAI. 16X60 FEET SELLING FOR AROUND RM300K. These houses were also selling like hot cakes. Lawyer Wang and SB Wong are having SCIENTEX KULAI SALES AND PURCHASE AGREEMENT PILING UP IN THEIR OFFICE.

I think SCIENTEX management is very smart and highly capable of generating more sales in ISKANDAR. I hope to buy some SCIENTEX in a market crash.

Who knows? The days are still early in this special October month. So hmmn?

Just wait and see how?

Posted by 股海無涯 > 2015-10-06 10:30 | Report Abuse

their consumer packaging division going to explode with visible expansion(more then double on 2017 after new factory for BOPP). so you will c the balance between property and manufacturing soon.

Posted by valuelurker > 2015-10-06 12:00 | Report Abuse

A better comparison would be to value the property segment of Scientex on a standalone basis vis a vis the other small/mid-cap developers

Posted by paperplane2 > 2015-10-06 17:14 | Report Abuse

great article. but my sifu said before they are too aggressive. need to be careful

Posted by Kevin Wong > 2015-10-06 19:51 | Report Abuse

So far a win-win stock for all its buy and hold investors

Posted by calvintaneng > 2015-10-07 07:46 | Report Abuse

Good morning from Calvin Tan in ISKANDAR.

Scientex great success in ISKANDAR‘S Property Sales is due to the total neglect of other property players in providing affordable landed houses around Rm300,000. Every where developers are building 2 storey houses above rm500,000 a unit. And nobody is willing to build any single storey landed property within 20 minutes drive from JB CITY.

Those who build high end condos to maximize profits are now facing very tepid sales while SCIENTEX ALONE IS DOING ROARING BUSINESS.

EVEN THOUGH SCIENTEX HOUSES ARE COMPACT IN SIZE ... 16X60 FEET THEY ARE THE ONLY AVAILABLE ONES IN ISKANDAR RIGHT NOW.

THERE IS A GREAT OPPORTUNITY IN THE SECONDARY MARKET IF YOU CAN GET

SINGLE STOREY HOUSE WITH 3 ROOMS 2 BATHS FOR RM200,000
DOUBLE STOREY TERRACE HOUSE WITH 4 ROOMS 3 BATHS FOR RM300,000

RIGHT NOW IN SHENZHEN PROPERTY PRICES ARE SIZZLING EVEN THOUGH HOUSEPRICES FELL BY 20% IN OTHER PARTS OF CHINA.

SO EXPECT ISKANDAR HOUSE PRICES TO BOOM FOR YEARS TO COME. SCIENTEX‘S
SUCCESS SHOWS THE SECRET TO PROPERTY INVESTMENTS IN ISKANDAR. GO FOR AFFORDABLE MID RANGE LANDED PROPERTIES BETWEEN RM200,000 TO RM400,000

Posted by gbk5566 > 2015-10-07 08:32 | Report Abuse

Could anyone show me how to calculate the Capital Expenses in the Table 1. I am new to fundamental Analysis. Thank you.

Posted by kcchongnz > 2015-10-08 07:42 | Report Abuse

Posted by gbk5566 > Oct 7, 2015 08:32 AM | Report Abuse
Could anyone show me how to calculate the Capital Expenses in the Table 1. I am new to fundamental Analysis. Thank you.

Capital expenses are shown in the cash from from investing activities in the cash flow statement.

Posted by gbk5566 > 2015-10-08 15:39 | Report Abuse

Thank you, Mr. Chong.
I had referred to past year annual report of Scientex from year 2014-2008.
I assumed the "Purchase of property, plant and equipment" from investing activities in the cash flow statement is the Capital Expenses.

YEAR Annual Report Your Table 1
2014 -65,665,000 -101.4 Mil
2013 -53,787,000 -53.8 Mil
2012 -40,922,929 -40.9 Mil
2011 -16,406,971 -16.4 Mil
2010 -24,017,724 -24.0 Mil
2009 -10,975,793 -12.2 Mil
2008 - 9,319,827 -39.0 Mil

From my table above, figures for the year of 2013, 2012, 2011 and 2010 are the same as your table.
Figures for the year of 2014, 2009 and 2008 are different.

Mr. Chong, is there any other amount which I need to take into consideration?
Sorry to trouble you.
Thank you.

Posted by kcchongnz > 2015-10-08 15:51 | Report Abuse

gbk5566,

The core business of Scientex includes properties and PVC/PP/PE. Hence any investment related to both core business are also considered as capital expenses, not only purchase of PPE. But still interpretation of this is also an art, and not an exact science.

Posted by ilovedivdend > 2016-01-01 17:23 | Report Abuse

Happy New Year KC, appreciate your good job here.


Unfortunately I only bought it at 9.5 after seeing your article and done some own studies recently, hopefully it's still not too late to jump on board.

Cheers~