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Business
Times, 21 December 2005 Scientex expects profit to improve next year By Chong Pooi Koon SCIENTEX Inc Bhd, a company which derives most of its income from industrial packaging as well as building houses, expects profit to improve next year as it adds new production lines and sells more houses. Managing director Lim Peng Jin said its second board-listed subsidiary Scientex Packaging Bhd is undergoing a major expansion to almost double the capacity for stretch film to 100,000 tonnes per year by mid-2006. "The first line would be operational by April next year, and the (financial) impact could be seen in fourth quarter (for the year ending July 31) 2006," Lim told reporters after a shareholder meeting in Subang Jaya yesterday. The current lines are already running at full capacity and the additional volume would allow the company to operate at a lower cost structure. Scientex's net profit grew 38.4 per cent to RM23.1 million for the year to July 2005, as revenue expanded 48.8 per cent to RM507.6 million. For the first quarter just ended in October 31, it made a 37.5 per cent higher net profit of RM6.8 million, on a 28.6 per cent higher revenue of RM145.2 million, the company told Bursa Malaysia Bhd after the stock market closed yesterday. Lim also expects a good response for its two phases of medium-cost, double-storey terrace houses that were launched in Pasir Gudang, Johor, in September to translate into earnings contribution in 2006. More than half of the 812 units in the so-called "Cassia" and "Heliconia" developments, designed based on the Balinese theme, were snapped up within the first four months of launching, he said. While the high-end residential market may have softened, demand for medium-cost landed property is still strong as a much bigger portion of the country's population falls under the medium-income group. The rising interest rate is also not expected to affect Scientex's house sales, Lim said, as banks still provide good package for home buyers of low to medium income. Scientex's houses are priced in the range of RM80,000 to RM120,000 per unit. Subject to authority's approval, the company may also start a new project on the newly-acquired 38ha freehold land next to Taman Scientex at Pasir Gudang by the middle of next year. "With all the plans that we have put in place, profits will be better. Growth will come from all three divisions," Lim said. Scientex earns about 42 per cent of its profits from industrial packaging, 40 per cent from property development and 15 per cent from the polymer division. It is also involved in the chemical business through a 30 per cent-owned associate company, Cosmo Scientex (M) Sdn Bhd, which is managed by its Japanese partner. |