Goodpack

CIMB Research on 17 Sept 2012

GOODPACK'S founder Lam Choon Sen has relinquished his role as managing director. He is succeeded by the president of Autoparts Michael Liew. We see no major changes in its strategic direction and focus on autoparts and synthetic rubber penetration.

Maintain "neutral" with an unchanged target price, still based on 14.3x 2013 EPS (-0.5sd from historical five-year forward average). The change at the top will not alter Goodpack's strategic direction, and our positive view of its longer-term potential. However, we think that the current valuation of 13.8x 2013 EPS has largely priced-in its near-term potential.

Mr Lam has stepped down as managing director and passed the baton to Mr Liew, group executive director and president of autoparts transportation. Mr Lam will stay on as group executive chairman to focus on the more strategic aspects of the business.

We view this move as an essential one for two reasons. First of all, Goodpack has identified autoparts transportation as a major growth driver going forward. This single market alone is estimated to be three times larger than natural and synthetic rubber combined. Assuming Goodpack is able to make a strong entry into autoparts transportation, Mr Liew will be in charge of, potentially, the largest market segment for Goodpack. We think it will be appropriate for him to helm the group. In addition, Mr Liew has been with Goodpack for over 16 years and has gained a deep understanding of the internal processes of the group's various departments. Our checks with management suggest that there will be no major changes in strategy. The new management will focus on implementing six-sigma throughout the organisation to facilitate processes and improve efficiency.

We deem this development as a non-event. It should not have a major impact on Goodpack's share price. Maintain Neutral.
NEUTRAL