Scientex Inc Bhd ("Scientex") is involved in the manufacture of pvc & pu leather sheeting; trading in bldg materials & textile products as well as invest holdings. One of its main subsidiaries is Scientex Packaging (a 61.37%-owned subsidiary), which is involved in the manufacture of stretch film; pp & pe woven bags & fabrics bags; flexible intermediate bulk containers as well as corrugated carton boxes.
Recent Financial Results
Scientex’s results for QE31/7/06 shows improvement in both topline & bottomline. Net profit increased 29.2% q-o-q or 20.0% y-o-y to RM8.6 mil on the back of a turnover of RM154.5 mil, which represents an increase of 10.7% q-o-q or 16.3% y-o-y.
Turnover for the latest 4 quarters amount to RM586 mil, an increase of 15.5% over the preceding 4 quarter’s turnover of RM508 mil. At the same time, net profit has increased by 24.0% from RM23.1 mil to RM28.7 mil while EPS increased by 22.7% from 37.3 sen to 45.8 sen. See the table below.
Valuation
Based on the last 4 quarters' EPS of 45.8 sen & the sahre price of RM2.82 as at Oct 20, the share is trading at a PE of 6.2 times.
In addition, Scientex's gross dividend has increased from 17 sen to 31 sen. Based on the a gross dividend of 31 sen, Scientex's dividend yield is about 11.0%.
Technical Outlook
The share price of Scientex has been consolidating for the past 18 or 19 months (since April 2005), with the upside resistance at RM3.00. The last long drawn-out consolidation was also about 18 or 19 months (from July 2003 to February 2005) before the share price broke above its then resistance of RM2.20/21 levels and went to a high of RM3.10. See the chart below.
Chart: Scientex's weekly chart as at Oct 20
Conclusion
Based on attractive valuation, Scientex is a good long-term investment. For short-term traders, you may want to wait until the share has surpassed the RM3.00 level.
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