Goodpack (GP) announced that it entered into an agreement with General Motors South Africa (GMSA) for the use of their Intermediate Bulk Containers (IBCs). This win signifies their first major win since embarking on an initiative to expand into the automotive industry. While the contract win is not expected to contribute significantly to its financials for FY12, this win places GP in an extremely beneficial position as GMSA intends to roll this initiative out to more of its component export suppliers. With a major automotive OEM under its belt and increased brand awareness, we expect GP to be able to secure additional clientele going forward. Although GP’s share price has suffered of late, we expect GP’s share price to stabilize at least in the near-term following this positive development. Reiterate BUY at an unchanged fair value estimate of S$1.70.
Wins General Motors South Africa contract
Goodpack (GP) announced that it has entered into an agreement with General Motors South Africa (GMSA) for the use of their Intermediate Bulk Containers (IBCs). This win signifies their first major win since embarking on an initiative to expand into the automotive industry. GMSA intends to use the IBCs to export car component parts – catalytic converters, electrical components and stainless steel exhaust components etc. – to the US, Mexico, South America, Australia, Europe and Thailand. With an initial order size of approximately 4K IBCs per month, the financial impact is not expected to be significant for FY12. However, this win places GP in an extremely beneficial position as GMSA intends to roll this initiative out to more of its component export suppliers. Furthermore, with a major automotive OEM under its belt and increased brand awareness, we expect GP to be able to secure additional clientele going forward.
Major rubber client expanding SG base
In another positive development for GP, its major synthetic rubber client, Germany’s Laxness, announced that it will build a second synthetic rubber plant in Singapore at a cost of €200m. The plant will produce environmentally friendly tyres and is expected to commence operations in 1H2015. Although this expansion will have no bearing on GP’s immediate financials, it serves to reinforce our assumptions that GP’s growth prospects remain optimistic. Lanxess currently contributes about 12% to GP’s top-line figure.
Reiterate BUY at S$1.70
GP’s price action since the release of its FY11 results has been somewhat volatile with some strong selling pressure over the past few days. However, with these two positive developments from GMSA and Lanxess, and coupled with downside revenue protection via IBC price increases in FY12, we expect GP’s share price to stabilize at least in the near-term. Reiterate BUY at an unchanged fair value estimate of S$1.70.
Goodpack (GP) announced that it has entered into an agreement with General Motors South Africa (GMSA) for the use of their Intermediate Bulk Containers (IBCs). This win signifies their first major win since embarking on an initiative to expand into the automotive industry. GMSA intends to use the IBCs to export car component parts – catalytic converters, electrical components and stainless steel exhaust components etc. – to the US, Mexico, South America, Australia, Europe and Thailand. With an initial order size of approximately 4K IBCs per month, the financial impact is not expected to be significant for FY12. However, this win places GP in an extremely beneficial position as GMSA intends to roll this initiative out to more of its component export suppliers. Furthermore, with a major automotive OEM under its belt and increased brand awareness, we expect GP to be able to secure additional clientele going forward.
Major rubber client expanding SG base
In another positive development for GP, its major synthetic rubber client, Germany’s Laxness, announced that it will build a second synthetic rubber plant in Singapore at a cost of €200m. The plant will produce environmentally friendly tyres and is expected to commence operations in 1H2015. Although this expansion will have no bearing on GP’s immediate financials, it serves to reinforce our assumptions that GP’s growth prospects remain optimistic. Lanxess currently contributes about 12% to GP’s top-line figure.
Reiterate BUY at S$1.70
GP’s price action since the release of its FY11 results has been somewhat volatile with some strong selling pressure over the past few days. However, with these two positive developments from GMSA and Lanxess, and coupled with downside revenue protection via IBC price increases in FY12, we expect GP’s share price to stabilize at least in the near-term. Reiterate BUY at an unchanged fair value estimate of S$1.70.
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