Scientex Berhad’s recent share price decline can be attributed to several factors impacting its packaging segment. In the first quarter ended October 31, 2024 (1QFY2025), the company reported a 6.7% decrease in net profit to RM128.6 million, primarily due to challenges in the packaging division, including unfavorable foreign exchange movements and softer export market demand. 

Property Segment Performance:
The property division demonstrated resilience, with revenue increasing by 6.0% to RM483.7 million in 1QFY2025. This growth was driven by steady construction progress and strong take-up rates across various regions, including Selangor, Penang, Perak, Malacca, and Johor. The company plans to launch 8,000 affordable homes annually starting in FY2025, aligning with its goal of delivering 50,000 affordable homes by 2028.   

Packaging Segment Performance:
The packaging division faced a 3.8% decline in revenue to RM625.7 million, attributed to softer export demand and unfavorable currency exchange rates. Despite these challenges, Scientex is focusing on innovation and sustainability, including developing customized, value-added packaging solutions with an emphasis on incorporating recycled materials. 

Segment Contributions:
In 1QFY2025, the property segment contributed approximately 43.6% of total revenue, while the packaging segment accounted for about 56.4%. 

Upcoming Quarter Results:
While specific forecasts for the upcoming quarters are not detailed, analysts anticipate that the property division’s robust performance will help offset challenges in the packaging segment. The company remains optimistic about sustained demand for affordable housing and is committed to enhancing its packaging offerings to navigate market challenges.  

Target Price:
Analyst opinions on Scientex’s target price vary. BIMB Securities maintains a “hold” call with a target price of RM4.50, while TA Securities has a “buy” call with an unchanged target price of RM5.48 per share. The consensus 12-month target price stands at RM4.75, offering a potential upside of 8.7% from its last traded price. 

In summary, Scientex’s share price decline is largely due to challenges in the packaging segment. However, the strong performance and positive outlook of the property division may help mitigate these issues. The company’s strategic focus on affordable housing and sustainable packaging solutions positions it to navigate current market challenges effectively.