UOB Kay Hian
Date of Report: Thursday, 18 September 2025

Scientex Berhad FY25 Results: Property Launches Accelerate While Packaging Faces Headwinds

Overview: Scientex Delivers In-Line FY25 Earnings with Strong Property Momentum

Scientex Berhad, a global leader in industrial packaging and a prominent property developer in Southern Malaysia, announced its full-year results for FY25, meeting market expectations. The company’s performance was marked by a robust showing in its property segment, offsetting ongoing pressures in its packaging business. UOB Kay Hian maintains a BUY call on the stock, with a slightly reduced target price of RM4.03, reflecting cautious optimism amidst sector-specific challenges.

Key Financial Highlights

Scientex’s reported core net profit for FY25 was RM516.7 million, a 5.8% decline year-on-year. This figure strips out minor forex and disposal losses, as well as fair value and revaluation gains. The company declared an interim dividend of 6 sen, keeping the full-year payout steady at 12 sen.

Segment Analysis: Property Outshines, Packaging Struggles

Packaging Segment: Margin Gains Amidst Fierce Competition

• Packaging EBIT for 4QFY25 stood at RM42.2 million, up 22.3% quarter-on-quarter, but down 6.7% year-on-year.
• Segment revenue was RM612.5 million, reflecting a flat quarter and a 6% year-on-year drop.
• Margin improvement was attributed to continued cost optimization and savings from new solar PV installations and lower electricity tariffs.
• Utilization rates remained steady at 60% despite continued price pressure from increased Chinese supply, which led to margin compression.
• Management expects headwinds to persist into FY26, with the market needing 1–2 years for consolidation.

Property Segment: Launches Accelerate, Sales Remain Resilient

• Property EBIT surged to RM170.2 million in 4QFY25, up 19% sequentially and 29% year-on-year.
• Quarterly revenue rose sharply to RM580 million (+17% QoQ, +12.2% YoY).
• Fourth quarter saw RM800 million in new project launches, bringing FY25’s total to RM2.55 billion (FY24: RM1.8 billion).
• Unbilled sales reached RM2.0 billion, with take-up rates holding firm at 70%.
• FY26 launch target is RM3.0 billion, supported by recent land banking, with six new acquisitions in FY25 expected to drive earnings from FY26 onwards.

Financial Metrics and Valuation

Key observations:

• Net debt to equity increased from 18.0% in FY24 to 48.4% in FY25, but is expected to gradually decline to 39.7% by FY28.
• Interest cover remains robust, with FY25 at 38.9x, projected to stay above 25x over the next three years.
• Return on equity (ROE) moderated to 14.7% in FY25 but is expected to recover above 15% from FY26 onward.

Valuation and Recommendation

• BUY rating maintained with a revised target price of RM4.03 (down from RM4.10).
• Target price based on FY26F PER of 11x, at -1.0 standard deviation to the five-year mean, reflecting sector challenges.
• Current share price of RM3.23 offers a 24.6% upside from the target, and the stock trades at -2.0SD to its five-year mean, suggesting an attractive entry point.
• FY26/27 earnings forecasts trimmed by 2% for housekeeping after full-year results.

Strategic and ESG Developments

• Scientex became the first Malaysian plastic film manufacturer to obtain ISCC Plus certification.
• Groupwide greenhouse gas emissions fell by 11.1% in FY24.
• Community investment totaled RM5.3 million, with 78% of the workforce sourced from local communities.
• The company adheres to the Malaysian Code on Corporate Governance.

Key Assumptions for FY25F–FY27F

Balance Sheet and Cash Flow Snapshot

Outlook: Opportunities Amid Challenges

• The property segment is expected to remain the main growth driver, with robust launches and new land acquisitions underpinning future earnings.
• The packaging segment faces near-term margin pressure from global oversupply, but recent cost controls and stabilizing prices suggest margins may have bottomed out.
• Scientex’s disciplined approach to expansion, cost management, and ESG leadership positions it well to weather industry challenges and capitalize on property sector growth.

Stock Data and Shareholder Information

• GICS Sector: Materials
• Bloomberg ticker: SCI MK
• Shares issued: 1,556.3 million
• Market cap: RM5,026.7 million (approx. US\$1,200.3 million)
• 3-month average daily turnover: US\$0.6 million
• 52-week high/low: RM4.66/RM3.08
• Major shareholders: Scientex Holdings Sdn Bhd (20.9%), Scientex Infinity Sdn Bhd (11.7%), Scientex Leasing Sdn Bhd (9.1%)

Conclusion: Value Emerges Despite Mixed Sector Prospects

Scientex’s FY25 performance demonstrates the resilience of its property business and its ability to manage short-term manufacturing headwinds through operational efficiency and sustainability initiatives. With a solid launch pipeline, stable dividends, and an attractive valuation, the company offers compelling upside potential for investors seeking exposure to Malaysia’s dual-growth sectors of property and packaging, albeit with a cautious eye on ongoing industry headwinds.