Scientex Bhd expects its ongoing property development projects, with a total gross development value of RM2.1 billion, to keep it busy at least until 2019.
For the nine months to April 30 2011, a 58.7-hectare145-acre Taman Mutiara Mas project in Skudai, Johor, became the second largest revenue contributor to Scientex’s property development segment.
The project, a mixed development of high-end residential and commercial properties, raked in RM46.3 million, or 29 per cent of the segmental sales of RM159 million during the period.
The company’s other projects are Taman Scientex Pasir Gudang and Taman Scientex Kulai, both in Johor as well as Taman Muzaffar Heights in Malacca.
Scientex managing director Lim Peng Jin told Business Times the group also has new launches in the pipeline and is exploring for new land banks to further strengthen its position in the property development sector.
“We expect the property business to contribute up to 30 per cent to our revenue by 2012 from 25 per cent now,” he said.
Scientex, in a filing to Bursa Malaysia last June, said that for the nine-month period ended April 30 2011, its earnings rose 32.9 per cent to RM56.47 million from RM42.49 million. Revenue increased by 19 per cent to RM598.82 million from RM503.13 million.
The company attributed the better performance mainly to its property development segment, which saw a 62.1 per cent growth in revenue to RM159 million for the nine-month period, against RM98.1 million of the previous year’s nine-month period.
Earnings rose 21.2 per cent to RM20.38 million in the third quarter ended April 30, 2011, underpinned by its property development and also announced a dividend policy to pay a minimum of 30 per cent of earnings as dividends.
As for Scientex’s industrial packaging manufacturing segment, Lim said it will continue to be its main revenue earner with a contribution of more than 50 per cent to its bottomline.
The packaging business posted an 8.6 per cent growth with revenue of RM439.9 million for the nine months of the current financial period.
Lim said growth will be extended once its new production line at its stretch film plant in Pulau Indah, Klang, is operational by October this year.
“The new production line will provide a 20 per cent jump to existing capacity of 100,000 tonnes to 120,000 tonnes,” he said, “The new production line will generate an additional capacity of 20,000 tonnes for us,” said Lim, noting that 80 per cent of its manufacturing revenues come from exports and overseas operations.
Lim said Scientex is expanding to the world market and Far East countries like Japan and Korea, European Union countries, Australia and New Zealand.
Lim said sales have increased with the expansion of capacities.
He said Scientex will continue to face with multiple challenges to ensure growth and higher earnings for its industrial packaging business due to the fluctuation of raw material prices and depreciation of the ringgit due to the shaky global market environment.
While it is seeing continued increase in demand for its stretch films, Scientex anticipates that the industrial packaging segment to face uncertainty from the weakening US dollar.
“Therefore, we are stepping up our initiatives to enhance our competitiveness even further, namely by increasing our production capacity to enjoy economies of scale,” Lim said.
Scientex offers various packaging products for outer packaging applications like stretch film, stretch hood, polypropylene (PP) strapping band and HDPE tying tape (raffia), among others.
It also manufactures and distributes PVC leather cloth and PVC sheeting, thermoplastic olefins/PP and PVC/PP foam skin materials, tufted carpet mats for automotive interiors, as well as door trims and headlinings for car manufacturers. – Business Times
