Wednesday, January 8, 2014

Goodpack - Proxy to US/Europe recovery (DBSV)

BUY S$1.95
STI : 3,167.43
Price Target : 12-Month S$ 2.25
Proxy to US/Europe recovery

• Prime beneficiary of US/Europe recovery
• New auto part contract is a strong re-rating catalyst
• Reiterate BUY, TP S$2.25

Stronger growth ahead. Goodpack is one of the best proxies to US/Europe recovery with almost half of its revenue from that region. On the back of stronger SR volume, we expect Goodpack to deliver US$14-15m profit (+26-35% y-o-y) in 2Q14 (FYE Jun), depending on the duration of the traditional year-end closing of factories in Dec.

Spotlight on autoparts. In the near term, we are hopeful that one of the major auto part contracts will be finalised. While the long awaited European OEM contract is pending approval, Goodpack has gained traction with another US-based automotive-related supplier.

Maintain BUY; TP S$2.25. Share price has risen 28% since our upgrade at end-July. We believe the macro recovery, coupled with positive earnings delivery and conclusions of auto contracts would continue to drive share price upwards. Our DCF-based TP of S$2.25 (WACC 9.1%; terminal growth 2%), translates to 17x FY14F PE and 2.6x P/BV, in line with its 10-year historical mean. Goodpack also offers 3-4% dividend yields based on 45% dividend payout ratio. Reiterate BUY on Goodpack for potential total return of 20%.

Source/Extract/Excerpts/来源/转贴/摘录: DBSV-Research,
Publish date: 03/01/13

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