Thursday, September 26, 2013

Scientex: Dividend surprise!! TA was probably too early in its earnings upgrade

Scientex just released earnings results. Earnings at RM110mil for FY2013, below the RM123mil forecasted by TA. I guess TA was too early to upgrade its earnings forecast and would have been accurate if they didn't issue an upgrade :P

Dividend is the real kicker with single-tier 19 sen - Ex-dates on 30 Oct (10 sen) and 2 Jan 2014 (9 sen). Based on full year dividend per share of 26 sen, dividend payout is 51%, way higher than its own guidance of 30%. Dividend yield is at 4.8% based on current price of RM5.40.

Prospects: RM55mil expansion in its stretch film production capacity by 26% by end of 2013 coupled with RM50mil expansion in its blown film lines (50% capacity expansion) catered for consumer packaging to be completed by mid-2014. To be more conservative, earnings could be around RM145mil for FY2014 or EPS of 67 sen. PER 10x-12x would translate to fair value of RM6.70 to RM8.04.  

For results news, click here
For previous posts, click here


  1. David, thanks for your generous sharing. Would be so kind to comment on the following feedback i chanced upon in forum :-

    "Did some study on Scientex:

    2013 up to q3 131.4 -325.2 -193.8
    2012 129.4 -111.8 17.6
    2011 110.9 -39.7 71.2
    2010 78.1 -90 -11.9
    2009 73.9 -25.2 48.7
    2008 66.9 -42.4 24.5
    2007 64.6 -21.3 43.3
    2006 93.2 -75.8 17.4

    2013(Up to q3)
    Short + Long term Loan: 312.2 million Sweat
    Cash: 58.6 million

    No. of share: 215
    Share price: 5.33
    Market capital: 1146 million

    2012 Dividend: 14 cents
    Dividend yield: 2.63% Thumbs Down Thumbs Down

    Net profit and revenue growth look so impressive but when converted to real cash they look disappointing to me.

    Personally I would not invest in this company because I am of the opinion that
    [1] the company's impressive net profit would not benefit me as an investor, and
    [2] the debt looks a worrying and I don't like company that has huge debt

    Just my 2 cents. Handshake Handshake Cash Cash

    Another thing that I don't like is when I was browsing through the quarterly report and annual report the numbers don't match with previous ones. I wonder why."

    Thanking you in advance!

  2. Numbers don't match? Probably they incorporated GW Plastics numbers and there are some amendments in numbers (Happens all the time). Stock investing is not as simple as ABC. Look at the boss, look at the shareholdings, look at future prospects. Debt levels are worrying??? It's earning RM110mil a year in FY2013 and could reach RM140mil in FY2014. So, it could repay its debts within 2-3 years. Can you repay your housing loans in 3 years?? There's absolutely nothing to worry about. Dividends: Please update on the latest dividends. It's 3.4%, looks decent to me. 2013 negative cash flow. Why? Due to acquisition of GW Plastics. Is this loans put into good use? An absolutely YES!!! GW Plastics will increase its margins, ROE as F&B packaging business in GW Plastics is way more lucrative than its existing industrial packaging.

    Boss and family holding 60% stake. What will you do as a boss? Reward yourself with dividends lah :p Boss interest is tied together with minority shareholders' like us.

    So, this guy is just looking at numbers and not the qualitative side of it. Not convincing at all.