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

Scientex Berhad FY25 Results: Resilient Property Growth Balances Packaging Headwinds

Overview: Scientex Delivers In-Line FY25 Earnings Amid Divergent Segment Outlooks

Scientex Berhad, one of the world’s largest industrial packaging companies and a rising property developer in Southern Malaysia, reported its FY25 results with a steady performance in core earnings. The group’s strategic shift towards property development continues to bear fruit, offsetting ongoing challenges in its packaging division due to increased competition and price pressures. UOB Kay Hian maintains a BUY recommendation, with a slightly revised target price reflecting near-term uncertainties but highlighting long-term value potential.

Key Financial Highlights: FY25 Performance at a Glance

Detailed Segment Analysis: Property Strength Balances Packaging Challenges

Packaging Segment: Margin Expansion Amid Competitive Pressures

• Packaging EBIT for 4QFY25 stood at RM42.2 million, up 22.3% quarter-on-quarter but down 6.7% year-on-year.
• Revenue dropped slightly to RM612.5 million as the segment faced continued headwinds from Chinese competitors, leading to oversupply and price pressure.
• Despite muted topline, cost optimisation initiatives and lower raw material prices led to a positive sequential margin expansion of 1.3 percentage points.
• Utilisation rates remained stable at 60%, but average selling prices (ASPs) and unfavorable forex trends continue to compress margins, which are expected to persist into FY26.

Property Segment: Strong Launch Momentum Drives Earnings

• Property EBIT surged to RM170.2 million for 4QFY25, a 19% quarter-on-quarter and 29% year-on-year increase, on revenue of RM580 million (+17% qoq, +12.2% yoy).
• Scientex launched an additional RM800 million in property projects during the quarter, bringing FY25 launches to RM2.55 billion (vs. RM1.8 billion in FY24).
• Unbilled sales reached RM2.0 billion, with robust take-up rates at 70%.
• Looking ahead, a higher FY26 launch target of RM3.0 billion and recent landbank acquisitions position the property segment as the main earnings driver, with new contributions expected from six parcels acquired in FY25.

Key Financial Metrics and Forecasts

Dividend and Shareholder Returns

• Interim dividend of 6 sen announced, bringing the total dividend for FY25 to 12 sen (unchanged year-on-year).
• Dividend yield stands at 3.7% for FY25, forecasted to remain stable in the coming years.

Strategic Outlook: Diverging Paths for Packaging and Property

Packaging Segment: Cautious Optimism as Market Stabilizes

• While Chinese competition and an oversupplied market continue to compress ASPs, raw material costs have eased, and completed solar PV installations at 10 plants are already driving margin improvements.
• The segment appears to have stabilized, hinting that prices may have bottomed out, but a meaningful market consolidation could still be 1-2 years away.

Property Segment: Momentum to Sustain Scientex’s Growth Trajectory

• Scientex’s aggressive FY26 launch target of RM3.0 billion and recent land acquisitions are expected to drive further growth, with contributions from the six new land banks (acquired in FY25) to begin in FY26.
• Resilient take-up rates and unbilled sales provide visibility and stability for future earnings.

Valuation and Recommendation

• BUY rating maintained, with a slightly lower target price of RM4.03 (previously RM4.10), reflecting a forward PER of 11x (-1.0SD to its five-year mean) due to ongoing structural challenges in packaging.
• Scientex is trading at a significant discount (-2.0SD to five-year mean), suggesting an attractive entry point for long-term investors despite short-term headwinds.
• FY26/27 earnings forecasts trimmed by 2% for housekeeping following FY25 results.

ESG Initiatives: Progress on All Fronts

• Environmental: First Malaysian plastic film manufacturer to receive ISCC Plus Certification; achieved an 11.1% decrease in groupwide greenhouse gas emissions in FY24.
• Social: Invested RM5.3 million in community programs in response to COVID-19; 78% of workforce is from local communities.
• Governance: Full compliance with the Malaysian Code on Corporate Governance (MCCG).

Key Assumptions for FY25F–FY27F

Stock Data and Shareholder Information

• Share Price: RM3.23
• Target Price: RM4.03 (Upside: +24.6%)
• Market Cap: RM5,026.7 million (~US\$1.2 billion)
• Shares Issued: 1,556.3 million
• Major Shareholders: Scientex Holdings Sdn Bhd (20.9%), Scientex Infinity Sdn Bhd (11.7%), Scientex Leasing Sdn Bhd (9.1%)
• 52-week High/Low: RM4.66 / RM3.08
• YTD Price Change: -24.8%

Conclusion: Scientex Remains a Value Proposition for Patient Investors

Despite near-term uncertainties in the packaging division, Scientex’s robust property segment growth and proactive cost management strategies position it strongly for future upside. The current valuation, at a substantial discount to historical averages, offers a compelling entry point for investors seeking diversified exposure to Malaysia’s industrial and property sectors. With a clear commitment to ESG and a strong launch pipeline, Scientex is well-placed to navigate industry cycles and deliver sustainable shareholder value.