SCIENTEX

Company background

Largest stretch(cast) film(拉伸膜) producer in Asia with an estimated 33% market share, the other remaining players are much smaller and highly fragmented, it is also among the top 3 producers of stretch film in the world with annual capacity of 194,000 mt. It has factories in Malaysia and Vietnam. Scientex is also involved in property development.

Stretch film account for 42% of total revenue, followed by the property segment 24%, Consumer packaging 17%, PP strapping band 5% and other polymer products 12%. - FY2014

Managing director Lim said the RM300mil investment would consist largely of internal funds. Of the RM300mil, RM80mil would be invested in the PE film manufacturing machine, RM170mil for the BOPP production machine and RM50mil for a CPP production machine.

The company raw material costs and selling prices are both denominated in US dollars, which means that the group has a natural hedge against the recent foreign exchange fluctuations. The group's resin procurement which makes up close to 65%-70% of its manufacturing operating costs.


Revenue breakdown

Net profit breakdown

Geographical information

Manufacturing

森德现有包装产品出口到全球逾60国，特别是拉伸膜和包装带，产量超过90%是运往海外。

Scientex makes 3 major products namely, stretch (cast) film, consumer packaging (blown film) and PP strapping bands. Products classified under “Other Industrial Products” include raffia, PU adhesives, auto interior products, woven bags, carton boxes, tufted carpet mats, FIBC (flexible intermediate bulk container), etc.

The packaging unit manufactures various packaging products designed for outer, middle and inner packaging applications:

• Outer packaging - Stretch film, Stretch hood, PP strapping band, HDPE and PP tying tape (Raffia)
• Middle packaging - Woven bags, Bulk bags (FIBC) and Corrugated Carton Box
• Inner packaging - Adhesives, Lamination film and PVC rigid film packaging 

·      

Industrial packaging

• Stretch film

150,000MT / 12 lines = 12,500MT/line @ Pulau Indah (12th line feature the latest nano technology capable of producing 22 layers of super thin gauge film which is superior in performance while providing significant cost reduction for each pallet wrap)

44,000MT / 4 lines = 11,000MT @ Rawang

• PP strapping - 24,000MT/yr / 13 lines = 1,846MT/line @ Melaka

Consumer packaging 

• Blown film(吹膜) - 51,000MT/yr @ Rawang
• BOPP (Biaxially-oriented polypropylene film) - 6,000 currently, 60,000MT by end-2016
• CPP (Cast polypropylene film) - 12,000MT by 4QCY15 @ Melaka

Others

• Corrugated carton box @ Senawang, Negeri Sembilan

• Woven bags & Raffia @ Vietnam 

Raffia mainly sold to Japan through Japanese JV partner

• Polyurethane adhesives 

30%-owned associate company

40% market share in Indonesia, 40% market share in Malaysia

• EVA (Ethylene-vinyl acetate) solar encapsulant film 

50:50 JV with MCTI to manufacture and distribute encapsulating sheets for solar cells, started commercial operations in Malacca at August 2012 with initial capacity of 10,000mt/annum. The JV company has started to make money in its second year (2013) of operation, although the contribution is still minor.

Managing director Lim Peng Jin expects its consumer-packaging arm to be a fast-growing engine, while its stretch film business will continue to grow steadily at some 10% per annum. He said while the demand for both industrial and consumer-packaging products have remained intact, the group has also noted lower profitability, due to the adoption of a market penetration strategy to establish its presence in new markets across South East Asia. 

“We continue to take a long term view of the consumer packaging sector, and are progressing with our expansion plans, [and] in the long run, we expect these expansion efforts to enhance manufacturing efficiency and reflect favourably on our result,” he said in a separate statement today.

Property 

Scientex ventured into property development in the mid-90s, starting with its flagship development in Taman Scientex Pasir Gudang (Johor) on about 1,000 acres. It has since acquired 637 acres of new land bank comprising 95 acres in Pasir Gudang in 2005, 250 acres in Kulai (Johor) in 2007, 136 acres in Ayer Keroh (Melaka) in 2009 and 156 acres in Skudai (Johor) in 2010.

The group has built a reputation as a leading property developer in Johor and Melaka, focusing on township development in Pasir Gudang and Kulai and higher-end niche projects in Skudai and Ayer Keroh. It enjoys healthy margins due to its cost efficiency.

Taman Scientex, Pasir Gudang 

Pasir Gudang is the base for Johor’s oldest and largest bulk cargo port, and is home to Scientex’s first foray into property development. Its proximity to the Eastern Growth Corridor of Iskandar Malaysia and its very own Pasir Gudang Highway make for exciting property investment.

Scientex prides itself as being one of the pioneers which introduced the Industrialised Building System (IBS) into its projects. Through the use of the IBS, construction costs can be reduced while the construction period can be shortened with better quality assurance and control.

Covering more than 1,100 acres of residential, commercial and industrial development, Taman Scientex Pasir Gudang is an integrated self-contained township that shall comprise over 13,000 residential and 400 commercial properties when fully completed.

To date, Scientex have built more than 11,000 residential & commercial properties in our flagship development of Taman Scientex Pasir Gudang which gives us the confidence to further capitalise on other towns within the Iskandar Malaysia region.

Taman Scientex, Kulai 

With its relative proximity to the Iskandar Malaysia region, Taman Scientex Kulai was launched in March 2008 and was initially targeted at the affordable homes segment. The development is spread over 250 acres of freehold land. To date, more than 1757 units have been sold out & 1438 units were successfully build and handed over to purchasers.

Source: iProperty

Kulai 2 

Due to overwhelming success of Scientex Kulai, and that the development of Scientex Kulai is at the final phase to cater for medium end market segment. Scientex Kulai 2 was acquired in 2013 for Scientex to continue fulfill the demand of mass housing within the area. 

The design and built up area for Kulai 2 will be also enhanced to provide our value home buyer with better design and bigger built up for the best of living comforts

Scientex Kulai 2 enjoys easy accessibility to North-South Highway thru Kulai toll plaza within minute. Added convenient of schools in the vicinity include SJC Kulai Besar, SMK Kota Kulai2, SMK Taman Putri Kulai, SK Taman Kota Kulai and a mini stadium. Other facilities within vicinity included Tesco Hypermarket, Johor Premium Outlet, Senai Airprot etc.

Taman Scientex, Senai 

Scientex Senai is an integrated development positioned over 250 acres, with extensive chemistry of industrial development, commercial hubs and conducive residential homes. Strategically located and well connected by international class infrastructural facilities, Taman Scientex Senai provides the complete solutions for comfortable living, business development and the definite acumen for capital investment gains.

Scientex Senai marks its official foray into the development of industrial factory with Innoparc which was launched in June 2013. Innoparc, a brand new industrial development spaces that engage and complement to the development within its surrounding areas. Innoparc consists of Semi Detached and Cluster multi-functional corporate industrial spaces suited for all range of purposes such as showroom, office premise, production or storage facility. The modern and elegance outlook comes with the thought of expansion with an ample space for business growth.

Designed to draw a a balance between work and daily living with the increasing demand of affordable homes within the area, Taman Scientex Senai also offers a collection of double storey terrace homes. Nestled amidst open lush greenery and serene community environment, these homes are complemented with modern exterior design and practical layout that suit to discerning homeowners working around the vicinity of Senai. These homes are located close to a myriad of amenities such as educational institutions, shopping malls, recreational parks, healthcare facilities and hypermarkets.

Some comments online
https://www.facebook.com/pages/Scientex-Senai/223498627803171
http://www.jbtalks.cc/thread-1585075-1-1.html
http://cforum.cari.com.my/forum.php?mod=viewthread&tid=3246029

Skudai

With the Iskandar Malaysia region set to be a hotbed of economic growth and commercial development, Scientex has made its mark with our crown jewel development of Taman Mutiara Mas in Skudai.

Spread over 146 acres, the entire RM1billion development is set within a green environment that blends nature to offset the normal hustle and bustle of city living. The development first began with our commercial products ‘1 Mutiara Mas’ and ‘1Signature’ in 2010 and 2011 which opened to remarkable success in a short span of time. Later, we moved on to build a full range of luxurious modern homes from 2½ Storey Exclusive Terrace Homes and 2-storey Garden Living Cluster Homes, to 3-Storey Luxury Canal Resort Homes. Currently, our eyes are fixed on our first high-end high rise project, the Garden Residences, which is set to become the next landmark in Skudai. The Garden Residences occupy a 7-acre area with more than three quarters of prime development land reserved for lush greenery.

Some comments online

https://www.facebook.com/pages/Scientex-Skudai/311435538910116

http://propertyreviews.my/scientex/

Scientex Heights, Melaka

The mixed development of residential and commercial properties is strategically located between the Ayer Keroh Interchange and Melaka City, which has been listed as a UNESCO World Heritage City. The development offers excellent accessibility as it is served by roads which lead to various parts of Melaka State. It is definitely one of Melaka best property locations as it is also surrounded by mature amenities such as tourist recreational spots, education centres, hospital and shopping centres.

Taman Muzaffar Heights occupies a total land area of 170 acres. The overall environment features well planned-landscaping and greenery on an elevated plateau. It offers serene surroundings for relaxation and rejuvenation after a long hectic day.

Judging by the success of all the products launched and the current take-up rate of more than 90%, we are confident that our future development covering approximately 137 acres will attract high demand from property buyers. Our upcoming high-rise development – “The Heights Residence” is set to appeal to investors as we foresee a high value return since it is sited just a short distance away from Multimedia University.

Some comments online:

Scientex booked in new property sales of RM470mil in FY2014, vis-a-vis total new launches of RM590mil during the year. Management guided that the majority of the new sales consists of affordable residential properties in Pasir Gudang, Senai, and Kulai in Johor. Unfilled sales amounted to RM537.4mil as of end-July. Management is looking at new launches with GDV of MYR550m per year for FY15 and FY16. Its existing landbank now stands at 896 acres with outstanding GDV of over MYR4.3bn.

Scientex is involved in both affordable and high-end housing, commercial and industrial development. 60% of its products are under the affordable category while 40% are lifestyle products.

Scientex landbanks are undervalued at an average cost of RM6 sf against the current valuations of greenfield sandbanks of RM8-10 psf. This would allow Scientex to reap higher margins vs its peers with gross margins reaching as much as 55% for its Skudai development.



The company's total undeveloped landbank now stands at 1,025 acres - 922 acres within Iskandar Malaysia in the Senai, Skudai, Kulai and Pasir Gudang, and the balance 103 acres in Melaka. Scientex has a total pipeline GDV of RM4.8bil based on the existing 1,025 acres of landbank.
- Sept2013

"We never chased after high price (land). When market is good, we will focus on developing the land we have. When market is bad, there might be opportunities for us to expand our landbank," says Lim Peng Jin. Due to its good cash flow, Scientex will continue to look for more land with an aim to cover more locations especially in Johor where it has established a network across the state.

- Mar2014

林炳仁表示，该公司將在2015年推出总发展价值达6亿令吉的房產项目。其中可负担房屋和高档產业將分別佔2/3和1/3的份额，主因可负担房屋需求依旧强稳。森德公司也参与柔佛州可负担房屋（RumahMampu Milik Johor）计划。「在这项计划下， 我们预料，未来2年將在柔佛推出2000个可负担房屋单位，其售价將介於8万令吉至15万令吉之间。」该公司计划，在2015年4月份推介有关房產项目。

- Dec2014

Mile stone

1968

Scientex was among the first wave of homegrown manufacturers to be established over the next few decades. The company was a pioneer in the production of PVC leather cloth and sheeting for intermediate applications in industrial and consumer products.

Scientex operated out of a rented facility in Johor Bahru with an initial workforce of only 40 people. In the first year, the company generated revenue of RM380,000.

1974

Scientex relocated entire operations from Johor Bahru to Shah Alam, base of operations until today. 


1977

Scientex diversified into plantation business by investing into Scientex Quatari Sdn Bhd, which owns 1,004 acres of plantation land near Pasir Gudang, Johor. This would turn out to be the stepping stone in Scientex’s foray as a premier property developer in Malaysia.

1990

Scientex went public and gained listing on the Main board of Bursa Malaysia on February 8.

SIB's subsidiary, Woventex Sdn Bhd's new plant in Melaka commenced operations in 1990.

SIB signed a JV agreement with Mitsui & Co., Ltd. and Yamato Chemical Ind. Co., Ltd. to set up Yamatex (Malaysia) Sdn. Bhd. to produce and market tufted carpet mats for automobiles in its Shah Alam plant.

1993

In 1993, SIB signed a license and technical agreement with Yamato Chemical Ind. Co., Ltd . to manufacture PVC/PP foamed sheets for automotive interior.

Taman Scientex Pasir Gudang was a result of a Joint Venture in 1993 with the Singapore’s Lim Kah Ngam Group to develop 33% of SIB’s land in Johor.

1994

In 1994, SIB acquired Scientex Containers Sdn. Bhd. to manufacture and market corrugated carton boxes for industrial packaging industry.

1995

To better reflect the Group’s diversified activities, Scientex Industries Berhad changed its name to Scientex Incorporated Berhad in 1995.

1996

1n 1996, Yamatex entered into a joint venture with Yamato and Mitsui to set up Scientex Polymer (Vietnam) Co., Ltd. to produce tufted carpet mats in Vietnam.

In 1996, Woventex Corporation Berhad was successfully listed on the Second Board of the KLSE.

1997

In 1997, Scientex ventured into the stretch film business through its subsidiary Scientex Packaging Film Sdn. Bhd. which commissioned its first stretch film production line (Line 21). This line had a capacity of 8,000 MT. This was the start of Scientex’s meteoric rise in the stretch film industry.

1997 also saw Scientex venturing into the PP strapping band business when Woventex Corp. Berhad entered into a joint venture with Tsukasa Chemical Industry Co., Ltd.

2000

In 2000, Scientex acquired 9.2 acres of land in Pulau Indah to house its stretch film production facilities. 3 years later, we added another 4.5 acres, making it a total of 13.7 acres. In years to come, this would be the world’s largest stretch film production facility in a single location.

2002

Scientex expanded into the food packaging industry when it entered into a joint venture with Mitsui Takeda Checimals, Inc. from Japan in 2002 to set up the first adhesive plant in ASEAN to manufacture and market adhesive materials for flexible food packaging.

2005

Scientex expanded its PP & PE woven bags, and FIBC bulk bags operations in 2005 by setting up its second manufacturing plant in Vietnam.

Scientex expanded its landbank in Pasir Gudang by acquiring 95 acres of freehold land next to its Taman Scientex in 2005.

2006

In 2006, Scientex Packaging Film expanded its stretch film operations in Pulau Indah by building a new factory costing RM 50 mil beside the existing factory.

2007

To cater to various segments of property purchasers, Scientex opened its new show village in 2007. This show village showcased a sales office as well as various show houses.

Scientex increased its property landbank in Johor in 2007 when we acquired 250 acres of prime freehold land in Kulai for RM 33 mil (RM3/sq.). This piece of land is strategically located in the Iskandar Malaysia region.

2008

A year after purchasing the land in Kulai, Scientex officially launched Scientex Kulai in March 2008.

In a rebranding exercise in 2008, Scientex changed its name to “Scientex Berhad” to better reflect its diversified operations. At the same time, a new corporate logo and tagline of “healthy, friendly & happy” was introduced.

Scientex ventured into the tying tape (raffia) industry in 2008, when we joint ventured with Tsukasa Chemical Industry Co., Ltd. of Japan to manufacture HDPE raffia tape in the Vietnam plant.

2009

In 2009, Scientex acquired the remaining paid-up capital of Rising Heights Development Sdn. Bhd. which owns 186 acres of residential and commercial development known as Taman Muzaffar Heights in Ayer Keroh, Melaka.

Pan Pacific Straptex cemented its place as one of the largest producer of PP strapping band in Asia after the completion of their 2nd factory in 2009.

As the world slipped into recession, the slowdown in trade impacted Scientex's business. The company responded by setting up an executive committee to draw up an ambitious five-year plan. Clearly, this was a case of seizing opportunity in a time of crisis.

2010

Scientex’s foray into property development continued with the acquisition of 146 acres of prime freehold land in Skudai in 2010. Taman Mutiara Mas would be Scientex’s crown jewel in property development.

Scientex achieved a capacity of 100mt of stretch film in 2010 with the commissioning of its 8th cast film line.

2011

In Scientex quest to be the largest stretch film producer in the world, we acquired another 12.4 acres of industrial land in Pulau Indah in 2011.

配合进军太阳能领域，森德综合投资2250万令吉与三井化学东乜口株式会社（Mitsui Chemicals Tohchello Inc，简称MCTI http://www.mc-tohcello.co.jp/english/ ）成立联营公司，以制造和分销太阳能电池用乙烯醋酸乙烯酯（EVA）薄膜 (ethylene vinyl acetate encapsulating sheets for solar cells) 。MCTI森德将在马六甲武吉南眉工业区内、占地2万3907平方米的土地上设厂。首个阶段内，这厂房年产量1万吨。“马六甲新厂房所生产的SOLAR EVA，主要在大马和新加坡销售。我们也计划将产品，出口至欧洲市场。

The company wholly-owned subsidiary, Scientex Packaging Film (SPF), raised its annual production capacity by 20%(9th production line) to 120,000 MT in July 2011, thus becoming the fifth largest stretch film producer in the world. 

Meanwhile, its 65% subsidiary, Pan Pacific Straptex, plans to raise its production capacity by 50% to 24,000 MT by end-2011, making it one of the world’s largest producers of PP strapping bands.

The group also added 2 lines to increase raffia capacity to 3,600 MT per annum. 

The 145-acre mixed development project of high-end residential and commercial properties in Skudai is now the second largest revenue contributor to the group’s property development segment, contributing RM46.3m or 29% of segmental sales of RM159m.

Financial-year 2012

The company is currently looking to add two more stretched film lines at its Pulau Indah plant in addition to its existing 9 production lines. Both lines are expected to increase capacity by a further 22% for this segment alone. The additional lines are only expected to begin commissioning in March and the middle of next year hence contributing from FY14 onwards as the group’s financial year-end is in July. 

The new lines will be fitted in its existing plant in Pulau Indah where the other 9 lines are located. This will bring its existing factory close to full capacity. Despite the full capacity of its plant in Pulau Indah, we do not foresee the group slowing down, as it has been expanding its stretched film business since 1998. The purchase of land adjacent to its existing plant will cater for any future installation of new lines for its stretched film segment which currently contributes an estimated 50% of the group’s overall manufacturing segment. Both its stretched film and strapped bands make up almost 65% of its manufacturing revenue.

2 new strapped bands were installed at its Malacca plant February this year thus increasing capacity by a total of 24kMT/year.

Scientex Quatari以4639萬收購Tropicana控股70%森德綜合今日公佈，以4千639萬令吉向3名人士收購Tropicana控股的70%股權，以取得柔州士乃約244英畝土地，在策略性地點擴大地庫供未來產業發展，以及拓展柔州伊斯干達發展走廊的商機。(66mil - 100%, 66mil / 244acres = 270,491/acre, 66mil/10628640 = 6.2/sq.)

Financial-year 2013

森德通过内部融资(83.2mil)及银行贷款(200mil)，以2亿8320万令吉并购长城塑胶。长城塑胶主要业务为PE膜（聚乙烯泡沫塑料），用于消费品包装内层，而Seacera则是包装外层。完成两家公司的收购，森德消费品包装业务是真的内外兼具，拥有完整的系列产品。

GW Plastic exports about 40% of its blown film. Both facilities are located in Rawang, Selangor which has ample space for expansion, as it owns an 11.3ha piece of industrial land.

Presently, the group manufactures strecth film catering mainly for the industrial sector, however following the acquisition the group would be able to tap into new territories such as the F&B sector especially in the bread packaging, whereby GW Plastic is the largest bread packaging manufacturer in Asia and Australasia. Other smaller segments include pharmaceutical, toiletries, E&E and agricultural.

GW Plastic has 28kMT/year of capacity in plastic blown film, mainly servicing the F&B sector which Scientex lacks presence. GW Plastic has been in the business of manufacturing blown film and cast film packaging for almost 40 years. Its products are used in a wide array of industries including food & beverage, household products, toiletries, E&E, agricultural, petrochemical and medical to name a few. It is one of the largest player in Malaysia in both these segments. Its export market alone contributed an estimated 60% of its sales to countries like Japan, Australia, New Zealand, Singapore, South Korea to name a few. Upon consolidation, Scientex would further strengthen its position as the largest stretch film producer in Asia, with an estimated 33% market share. The other remaining players are much smaller and highly fragmented. 

Scientex also expanded its Pulau Indah stretch film facility in 2013 to cater for 3 additional production lines as well as having a total of 33 loading bays.

Since the commissioning of our 9th stretch film line at our Pulau Indah plant in September 2011 (Production 120,000MT / 9 lines = 13,333MT/line), we have further installed 2 new lines, which were commissioned in July and August of 2013. Our 12th line is due to be installed and operational by end of 2013. With that, we would have a total combined stretch film annual capacity of 194,000 metric tonnes, with 12 lines located at our Pulau Indah plant and 4 lines at our Rawang plant (194,000MT / 16 lines = 12,125MT/line). We will also continue to leverage on technology to produce quality products. Our soon to be installed 12th line in Pulau Indah will feature the latest nano technology capable of producing 22 layers of super thin gauge film which is superior in performance while providing significant cost reduction for each pallet wrap.

我们正在进行一项总值5000万令吉的扩充计划，这包括了收购与安装机器与辅助器材的成本，以及提升位于雪州万挠的现有厂房设施。」配合此项產能扩充计划，该公司已经与德国的Windmoller & Holscher公司签署合约，向后者收购5部吹膜（blown film）机器，將此类机器的总数增至17部，而產能从每年的3万4000公吨，提升至5万1000公吨。

In June this year, the company obtained British Retail Consortium (“BRC”) certification from the United Kingdom authority and we are now able to promote our products to the United Kingdom and European Union markets which offer vast potential for our food packaging products.

Our PP strapping band plant in Melaka now boasts a total of 13 production lines with an annual production capacity of 24,000 metric tonnes. With the increase in capacity, the Group continued its efforts to increase sales. To diversify our market base, we are also making customized products for our customers in Australia and New Zealand. We also made inroads into new markets in Denmark, United Kingdom, United States and Mexico while at the same time seeking to improve our existing market share in the other Asia Pacific countries with our competitively priced products.

Sales of our polymer products for the financial year under review has been relatively stable. We have started new product development with international automotive producers namely General Motors (“GM”) and Ford to develop a new vinyl material with special properties to be used in the production of automotive parts such as seats, arm rest, console and headrest. For the year under review, we have started supplying these custom made products to GM since February 2013 and we are expected to commence delivery of these products for Ford models by the beginning of 2014.

森德以4000万令吉，收购东南亚瓷砖(Seacera)旗下的Seacera Polyfilms私人有限公司。Seacera Polyfilms是国内BOPP(Biaxially Oriented Polypropylene)的主要生产商之一，用作食品和液体软包装领域的保护性外层材料，年产能达500公吨。目前，公司由7成产品供国内市场，剩余3成则做出口。

Scientex property division ventured into industrial property development when it launched its maiden industrial property project known as Innoparc in 2013.

Scientex continued to expand its landbank in Iskandar Malaysia with the acquisition of two pieces of freehold lands measuring a total of 48.4 acres in Kulai, Johor.

Scientex achieved a monumental milestone in 2013 when, for the first time in its history, Scientex achieved a revenue of RM1.2 billion and a net profit of RM110 mil.

森德以4000万令吉，收购东南亚瓷砖(Seacera)旗下的Seacera Polyfilms私人有限公司。Seacera Polyfilms是国内BOPP(Biaxially Oriented Polypropylene)的主要生产商之一，用作食品和液体软包装领域的保护性外层材料，年产能达500公吨。目前，公司由7成产品供国内市场，剩余3成则做出口。

2014

- Setup Scientex Great Wall. Great Wall Plastic produces polyethylene films while Seacera Polyfilms manufactures biaxially-oriented polypropylene films.

"While we continue to chart commendable performance in our manufacturing segment, we are now setting the foundation for our next growth phase via the strategic consolidation of our consumer packaging division under a single platform of Scientex Great Wall."

"It's a natural progression to align our enlarged consumer packaging product range under Scientex Great Wall. This will not only enable us to be a one-stop consumer packaging solution provider., but also ensure our visibility as a leading integrated consumer flexible packaging player," said Scientex managing director, Lim Peng Jin in a statement.'

- Scientex Bhd has inked a strategic alliance with Japan’s largest biaxially oriented polypropylene (BOPP) film manufacturer, Futamura Chemical Co., Ltd (FCC) to build a BOPP film manufacturing plant in Malaysia.  Futamura is a Japanese based company with over 60 years of experience in film and non-film packaging. It is the largest BOPP film manufacturer in Japan with a domestic market share of 30%, with reported sales of USD667mn (RM2.2bn) in FY14. 


Scientex said both firms would jointly grow and develop the consumer packaging markets in Japan and Southeast Asia. It said the companies’ first initiative under the partnership was to build a new world class BOPP film manufacturing plant incorporating the advance technology to operate at the highest production speed while adhering to stringent Japanese quality standards besides riding on the advantage of lower Southeast Asia manufacturing costs within Malaysia. 

Scientex said the strategic alliance through SGW entitled FCC to purchase up to 20% of the issued and paid-up capital of SGW within the next five years with an initial subscription of 5% (40mil) of the issued and paid-up capital of SGW (Scientex Great Wall). 

SGW will build a new BOPP film manufacturing plant in Pulau Indah, Port Klang at an estimated capital outlay of MYR170m. The plant will have an annual production capacity of 60,000 tonnes of BOPP films upon completion by end-2016. Upon commencement of the plant, FutChem will be allocated 30% of the production capacity for sale and distribution in Japan. The remaining 70% will be marketed in Malaysia and other South-East Asian countries by Scientex. 

In addition, SGW has announced its intention to penetrate into the cast polypropylene film (CPP - widely used as the sealing layer in laminated flexible packaging), with an initial production capacity of 12,000 tonnes. This new setup will cost an estimated MYR50m and we expect full commercial production to commence by 4QCY15.

Its proposed expansion plans would require capital investment of over RM240mil (CPP-50mil, BOPP-170mil) over the next two years. Managing director Lim Peng Jin said the company would focus on growing its consumer packaging business in South-East Asia and Japan.

1Q2015 (Aug-Oct2014)

Scientex’s consumer packaging PE film segment to lower average selling prices (ASPs) in order to increase presence in new markets across South-East Asia. The net profit plunge of 38% quarter-on-quarter from this strategy has caused EBIT (earning before interest and tax) margin compression in the manufacturing segment (5% in 1Q15 vs 6% in 4Q14), as well as foreign exchange loss of around RM5mil from dollar borrowings. This was despite revenue rising by 18% year-on-year to RM431.1mil; on the back of an 11% jump in manufacturing segment revenues and 46% increase in the property segment revenues. “The former was mainly driven by additional blown films capacity while the latter was led by the contribution from its latest development in Taman Scientex Senai. Despite such items, the above mentioned market penetration strategy resulted in overall net profit growing at a slower pace of 3%.

The research house said it was expecting weaker forward earnings from the manufacturing segment as Scientex continues its market penetration strategy in the second quarter of the financial year 2015.  It said Scientex would continue to face forex losses in view of the weakening of the ringgit against the greenback, seeing as to 77% of borrowings in Q1 was denominated in the dollar.

2Q2015 (Nov2014-Jan2015)

For the current quarter ended 31 January 2015 (Q2FY2015), the Group recorded revenue of RM462.9 million, an increase of 20.7% as compared to RM383.5 million recorded in the preceding year corresponding quarter. Profit before tax was RM47.3 million, an increase of 6.5% as compared to RM44.4 million in the preceding year corresponding quarter, after taking in a foreign exchange loss of approximately RM9.7 million in the current quarter under review, as a result of the weakening of Ringgit Malaysia ("RM") against United States Dollar ("USD").

Manufacturing revenue recorded was RM327.0 million, an increase of 13.3% compared to RM288.5 million in the preceding year corresponding quarter. The increase was attributed to the higher contribution from both the industrial and consumer packaging products in both the local and export markets. Profit from operations increased from RM16.0 million to RM17.4 million, in line with the higher revenue recognized.

Property revenue recorded was RM135.9 million compared to RM95.0 million in the preceding year corresponding quarter, an increase of 43.0%. The improvement in revenue is mainly due to strong progress billing contribution from Taman Scientex Senai. Meanwhile, the sales and progress billing from Taman Scientex Pasir Gudang, Taman Scientex Kulai, Taman Mutiara Mas and Taman Muzaffar Heights remain satisfactory. Profit from operations increased from RM29.4 million to RM40.3 million, an increase of 37.2%. The increase is consistent with the increase in revenue.