Scientex ends FY2023 on high note, recommends five sen dividend

• In terms of its property division, Scientex said it is optimistic that demand for its affordable housing will remain resilient for the coming financial year.

KUALA LUMPUR (Sept 20): Global packaging manufacturer and property developer Scientex Bhd posted a strong finish to its financial year ended July 31, 2023 (FY2023), thanks to better performance from its property division for the year.

The group posted a net profit of RM438.14 million in FY2023, a 6.9% increase from RM409.87 million in the previous year.

Revenue for FY2023 was also up 2.3% to RM4.08 billion from RM3.99 billion in FY2022. Scientex said operating profit also came in higher at RM589.6 million compared with FY2022's RM561 million.

Scientex said for FY2023, its board of directors recommended a final dividend of five sen per share, payable on Jan 26, 2024. This is subject to shareholders’ approval at the forthcoming annual general meeting.

This was despite net profit for its fourth financial quarter ended July 31, 2023 (4QFY2023) coming in lower at RM114.89 million compared with RM124.98 million. Earnings per share for 4QFY2023 was 7.41 sen compared with 8.06 sen in 4QFY2022.

Quarterly revenue stood at RM1.07 billion, down 3.6% from RM1.11 billion a year earlier.

In a filing with Bursa Malaysia on Wednesday, Scientex attributed the weaker 4QFY2023 performance to lower packaging revenue of RM619.7 million, compared with RM740.8 million recorded in 4QFY2022, mainly due to an overall softening of market demand across all product segments.

However, this was offset by higher property revenue in 4QFY2023, which came in 21.9% higher at RM451.8 million from RM370.5 million a year earlier, contributed by higher progress billing from its ongoing projects in Bandar Jasin, Kundang and Tasek Gelugor.

On its prospects in FY2024, Scientex said its packaging division continues to face operational challenges amid the backdrop of softer global demand, as well as factors such as rising core inflation rate, interest rates and energy cost, which lead to higher production cost.

"The division is grounded on its fundamentals and remains committed to drive the operation cost down by improving the production efficiency, as well as managing its operational costs and product wastage. With the on-tracked capacity and capability expansion plan, we strive to optimise its production and labour efficiency, increase its competitiveness and to enhance its product value.

"The packaging division has also embarked on the adoption of solar photovoltaic projects to mitigate the rising energy cost and at the same time reduce carbon footprint through sustainable energy generation and consumption," it added.

Scientex said the packaging division expects to explore more opportunities and increase its markets base more aggressively as it continues to focus on innovation and developing value-added products customised to the needs of the group's customers whilst addressing market trends and demands for sustainable and fully recyclable packaging solutions.

"While the packaging division expects the current market conditions to continue in the near-term, the division remains focused on its long-term growth strategy and is confident that its performance for the coming financial year (FY2024) remains sustainable," it said.

In terms of its property division, Scientex said it is optimistic that demand for its affordable housing will remain resilient for the coming financial year.

"To maintain the fundamental and effective cost control, the division will continue to source and acquire competitively-priced land banks and to properly manage the overall development costs.

Scientex added that it will continue to launch new phases of affordable housing across its developments in Peninsular Malaysia to meet the robust demand by leveraging on its branding and strategic locations. "The latest land acquisitions were located in Jenjarom in Selangor, Tebrau and Kulai in Johor Bahru, which are expected to be completed in the coming FY2024 and will contribute positively to the division’s performance in the near future," it added.

At mid-market break on Wednesday, Scientex shares were up five sen or 1.36% at RM3.73, giving it a market capitalisation of RM5.79 billion. The stock's share price has risen 14.4% so far this year.

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