Scientex Bhd’s continuous growth pattern, which began in 2009, was not disrupted by the Covid-19 pandemic, which has wreaked havoc on the global economy. Despite the harsh economic conditions, the company achieved record-high revenue as well as profit after tax (PAT) in The Edge Billion Ringgit Club’s (BRC) review period between 2018 and 2020.

Incorporated in 1968, Scientex, which started out as a manufacturer of polyvinyl chloride leather cloth and sheeting, is now one of the world’s largest producers of industrial stretch film. It is also an established property developer in Malaysia and aims to build 50,000 affordable homes by 2028.

The company’s PAT was RM255.9 million in the financial year ended July 31, 2017 (FY2017), which was then the record high. The earnings growth gathered steam, pushing it to fresh records in the following years.

Scientex’s PAT leaped to RM284.5 million in FY2018 and surpassed the RM300 million mark in FY2019, with RM333.7 million. In FY2020, while many companies were struggling to stay above water, it delivered another stellar set of results, with a record-high PAT and revenue of RM390 million and RM3.52 billion respectively.

With that, Scientex achieved a three-year profit after tax compound annual growth rate of 15.1%, the highest among listed companies with a market capitalisation above RM1 billion in the industrial products and services sector.

Revenue generated by the industrial packaging segment expanded from RM1.67 billion in FY2017 to RM2.55 billion in FY2020; its operating profit climbed from RM98 million in FY2017 to RM251 million in FY2020.

Meanwhile, property revenue climbed to RM967.5 million in FY2020, from RM733.5 million in FY2017. In line with the increase in revenue, the segment’s operating profit increased to RM298.4 million from RM227.1 million for the three years under review.

Through mergers and acquisitions, the group has substantially expanded its packaging business in the past three years. It bought a 42.48% stake in Daibochi Bhd in February 2019. Upon completion of the mandatory general offer, the company obtained 61.89% equity interest in Daibochi for RM322.1 million, which was satisfied by the issuance of 26.03 million Scientex shares and cash consideration of RM93.1 million.

Two years later, the group launched a takeover bid to take its 71.9%-owned subsidiary Daibochi private, but the attempt was unsuccessful.

In FY2020, the group also approved the proposed 2-for-1 bonus issue of shares and 1-for-5 free warrants issue.

The group’s net profit continued to climb in FY2021, rising 17.2% to RM457.23 million from RM390.11 million a year earlier. It achieved record revenue of RM3.66 billion in FY2021, an increase of 3.9% compared with RM3.52 billion a year earlier.

In 2021, it acquired a total of six parcels of land totalling 1,944 acres for RM547.5 million, and committed to acquire four others parcels totalling 1,527 acres for RM966.9 million.

Amid continuing challenges faced by the global economy because of Covid-19, the group says it remains cautiously optimistic about prospective growth opportunities across both of its dual core businesses.

Owing to ongoing market uncertainties, the group says its packaging division continues to face enhanced operational challenges, including volatility of raw material prices, rising logistics costs and heightened financial market volatility.

Scientex says it will continue to monitor global developments and manage such volatility to minimise any material adverse impact on its operations.

As for property development, it expects the demand for affordable housing to continue as economic activity picks up.