SCI: Robust Quarterly Performance Driven by Strategic Efficiencies, Outlook Positive for Continued Growth

The company has reported a strong start to its financial year, with first-quarter FY26 (July) core profit of MYR141 million meeting market expectations. Despite a slight 2% quarter-on-quarter (QoQ) decline, the results represent a robust 9% year-on-year (YoY) increase, signalling a solid foundation for a stronger year ahead.

Performance Review

The positive performance was largely driven by a combination of favourable sales mix, operational efficiency initiatives, and effective cost optimisation across its key segments. The packaging division saw its revenue improve by 3% QoQ (flattish YoY), with a notable 10% QoQ and 50% YoY surge in Earnings Before Interest and Taxes (EBIT). This led to an improved margin of 7.4% for the quarter, up from 6.0% in FY25 and 6.9% in 4QFY25.

Meanwhile, the property segment recorded impressive 9% YoY growth in sales and an 8% YoY increase in EBIT, attributed to steady construction progress. However, on a QoQ basis, property sales experienced a 9% decline, resulting in a 7% decrease in EBIT, largely due to the cyclical recognition of property launches which are concentrated in the fourth quarter.

Operational Highlights and Challenges

While the packaging segment continues to benefit from lower raw material costs, management maintains a cautious outlook on demand recovery amid subdued market sentiment and intense competition. The segment’s utilisation rate improved slightly QoQ to approximately 60%, and it aims for a 6-7% margin in FY26, supported by cost efficiencies. The group is actively working to increase market share through volume expansion.

Future Outlook and Strategic Initiatives

The company’s future outlook remains optimistic, particularly in its property development segment. It successfully launched two major townships in 1QFY26 – the 708-acre Scientex Jawi and the 1,094-acre Scientex Muar. These launches, along with the planned Scientex Pulai 4 in 2QFY26, contributed to a total gross development value (GDV) of MYR645 million for 1QFY26, with an impressive average take-up rate of 45% for the approximately 1,800 units. The company anticipates scaling up its annual property unit launches to 10,000 units within the next two years.

Investment Outlook

These strategic efforts and robust financial performance underpin a positive outlook for the company. Investment bank TA Securities has issued a BUY recommendation, setting a target price of RM0.25, representing a significant 25.0% upside from the last traded price of RM0.20. This rating reflects confidence in the company’s ability to capitalize on its operational efficiencies and strategic expansion initiatives to drive future growth.