Thursday, November 14, 2013

Goodpack Limited: 1QFY14 results in-line (OCBC)

Goodpack Limited:
Fair value S$1.87
add: 12m dividend forecast S$0.05
versus: Current price S$1.91
1QFY14 results in-line

Goodpack’s 1QFY14 results came in within expectations with revenue increasing 7.7% YoY to US$52.1m following greater demand by customers in the rubber industry. The company also managed to keep operating margins relatively stable despite incurring higher depreciation and financing costs from having a larger IBC fleet. As a result, operating profit and PATMI grew by 11.8% YoY to US$19.3m and 7.2% to US$13.9m, respectively. For the remaining quarters, we expect top-line growth to sustain as its key clients’ synthetic rubber (SR) operations in Singapore ramp up operations. In terms of margins, we had previously factored in some margin deterioration but the decent 1QFY14 performance gives us some cause for optimism for the rest of year. Nonetheless, we leave our conservative FY14F projections intact but incorporate a slower pace of debt repayments. This causes our DCF-derived fair value to rise to S$1.87 (S$1.69 previously). However, Goodpack’s share price has risen by more than 23% since late-Aug, we believe that much of the upside has been priced in at this point. Downgrade to HOLD.


Decent set of 1Q14 results
Goodpack’s 1QFY14 results came in within expectations with revenue increasing 7.7% YoY to US$52.1m following greater demand by customers in the rubber industry. The company also managed to keep a lid on the pace of operating costs increases – despite incurring higher depreciation and financing costs from having a larger IBC fleet – and operating profit and PATMI grew by a corresponding 11.8% YoY to US$19.3m and 7.2% to US$13.9m, respectively. Although this bottom-line increase was partially aided by one-off foreign currency gains (US$860K gain vs. US$679K loss in 1QFY13), there was improvement on a core basis QoQ, which gives us comfort that opex increases have remained in check.

Top-line growth to continue; opex should be manageable
For the remaining quarters, we expect top-line growth to sustain as its key clients’ synthetic rubber (SR) operations in Singapore ramp up operations. In terms of margins, we had previously projected some deterioration in 1QFY14 as a result of having a larger IBC fleet but 1QFY14 margins have held up well on a YoY basis so there is some cause for optimism for the rest of the year. In addition, we also expect leasing costs to taper off gradually as Goodpack continues to shift towards purchasing a larger proportion of IBC additions. As for financing costs, the bulk of its debts have fixed rates so we are unconcerned over a potential hike in rates.

Downgrade to HOLD
We leave our FY14F top-line forecasts intact but incorporate a slower pace of debt repayments. This causes our DCF-derived fair value to rise to S$1.87 (S$1.69 previously). With Goodpack’s share price increasing by more than 23% since late-Aug, we believe that much of the upside has been priced in at this point. Therefore, we downgrade Goodpack to HOLD.



Source/Extract/Excerpts/来源/转贴/摘录: OCBC-Research,
Publish date: 12/11/13

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