The two deals, worth a total of over half a billion ringgit, were sealed within a month of each other by the plastics manufacturer cum property developer.
In early January, Scientex was dealt a blow by the EPU, which falls under the Prime Minister’s Department, when its second attempt to buy the 960 acres of prime land in Tebrau, Johor Bahru, from SP Setia Bhd fell through again.
It had first attempted to acquire the land in 2021 for RM518.1 million. However, the deal was nixed in March 2023, after its subsidiary Scientex Lestari Sdn Bhd failed to obtain a waiver of the Bumiputera equity condition imposed by the EPU.
A new deal was struck with SP Setia in July 2023 at a higher price of RM548 million after Scientex formed a joint venture with Bumiputera businessman Azman Mahmud. It had earmarked the land to be developed into a township with 12,000 affordable houses, with an estimated gross development value (GDV) of RM8 billion.
A Scientex spokesperson told FMT Business then that the setback did not affect the group’s long-term plans, and that it remained “committed to delivering more affordable homes nationwide”.
True to its word, Scientex’s unit Scientex Park (M) Sdn Bhd sealed an agreement last week with Metalplex Plantation Sdn Bhd for the acquisition of 826 acres of freehold land in Batang Berjuntai, Kuala Selangor, for RM335.68 million. The proposed acquisition is expected to be completed in the first half of 2025.
In early February, another subsidiary Scientex Heights Sdn Bhd entered into an agreement with Singapore-based Guan Hong Plantation Pte Ltd to acquire 1,094 acres of agricultural land in Muar, Johor, for RM200 million to develop a mixed-property project.
Scientex’s property division aims to deliver 50,000 units of affordable homes by 2028. To date, it has delivered nearly 32,975 such homes priced below RM500,000 nationwide. Its land bank exceeds 7,250 acres across seven states in Peninsular Malaysia.
Analysts give thumbs up
Research analysts are positive on Scientex’s latest deal as it allows for the expansion of its property footprint in the northern part of Selangor.
In a note, Kenanga Research said the price tag of RM9.33 per square foot (psf) was a discount to the asking price for agricultural land in the surrounding areas of between RM12 and RM13 psf.
It attributed this to the location, between the towns of Ijok and Bestari Jaya, being a distance away from Kuala Selangor town, potentially low land efficiency owing to land use restrictions, and need for additional investment in basic amenities.
It maintained its “hold” call but raised the target price (TP) to RM3.75 from RM3.63 previously.
RHB Research said the proposed acquisition would more than double Scientex’s current presence in Selangor’s property market to about 1,450 acres.
It noted the company’s presence in Selangor’s property sector is still small versus what it owns in Johor and Melaka. In Selangor, it only has developments in Rawang, Kundang Jaya, Cheras, and Jenjarom with a combined size of 663 acres.
“We estimate the GDV of this acquisition to be RM2.5 billion. Hence, we are positive on the news, as the acquisition would further boost Scientex’s earnings base in Selangor, given the robust demand for affordable houses,” it said.
The research house kept its “hold” call and also left its TP unchanged at RM3.75, stating it believes Scientex is “fairly valued”.
Meanwhile, TA Securities upgraded the stock to “hold” from sell due to the recent decline in its share price, which now offers more upside. It maintained its TP at RM4.07 per share.
It said the proposed acquisition price of RM335.7 million is “reasonable” and reckons the potential GDV to be around RM4 billion, based on its historical projects in the central region.
A family business transformed
Scientex is helmed by the Lim siblings, Peng Jin, 55, and Peng Cheong, 60, the managing director cum CEO, and non-independent non-executive director, respectively.
Forbes lists the brothers on its 2023 Malaysia’s 50 Richest list with a collective net worth of US$740 million (RM3.5 billion). Their father, Lim Teck Meng, founded the company in 1968 as a manufacturer of PVC sheeting with a rented factory lot in Johor Bahru.
Peng Jin took control of the family-owned company in 2014 when his father ceased to be a major shareholder, according to Forbes. The younger Lim built Scientex into one of the top three producers of stretch film in the world. Over the years, the company ventured into plastic packaging and property development.
Peng Jin graduated with a Bachelor of Science in Chemical Engineering from the University of Tokyo in 1990. He began his career in the chemical industry in Japan before joining Scientex in 1991 as a management consultant.
Peng Cheong graduated with a Bachelor of Science in Business Studies from City University, London, in 1984. He was appointed to the board as an executive director in 1988, and has held this position until 2003, when he was re-designated as non-executive director.
He was also the managing director of Malacca Securities Sdn Bhd and was redesignated as executive chairman in 2021, according to the Scientex website.
Scientex’s shares ended at RM3.85, 1 sen or 0.3% lower yesterday, valuing the group at RM5.97 billion.