KUCHING: Scientex Berhad’s (Scientex) announcement of a strategic alliance with Futamura Chemicals last month is set to help boost the company’s margin.
TA Securities Holdings Bhd’s research arm (TA Research) noted that in the nineth month financial year 2014 (9MFY14), despite its busy engagement coping with the rising demand for both stretch films and blown films, the group is currently focusing on expanding its BOPP film segment by 10 times its current capacity via a strategic alliance with Futamura Chemical.
According to market research, this business segment is expected to grow by a compound annual growth rate (CAGR) of 6.5 per cent in 2014-2018 globally.
“Besides increasing total packaging capacity by 24 per cent upon its commencement, we expect margin for the manufacturing segment to rise as well,” said TA Research.
Scientex’s earnings grew by 25 per cent year on year to RM100 million. This is attributed to both its manufacturing and property segments. Since then, analysts from the research house have gathered from management that three out of five blown films lines that came in January this year have already been fully utilised.
However, the other two lines scheduled for commissioning by July have been postponed to August and September this year respectively.
As for its property segment, Ta Research gathered that two new launches took place in 4QFY14 booked RM126 million in sales. Management also added that, higher end launches have been scaled back to make way for its affordable housing range. Despite expecting a contraction in margin in the near term, “we think new sales contribution from Senai since 1QFY14 should help push up earnings going forward,” it said.