Goodpack’s 3Q13 results met our expectations with revenue growing 3.0% YoY to US$44.8m on the back of continued gains from its synthetic rubber segment. Although operating expenses fell slightly and operating profit increased by 7.5% to US$16.3m, higher financing expenses caused PATMI for the quarter to fall 5.9% to US$10.9m. Entering 4Q13, we reduce our revenue projections following a delay in IBC usage for two new synthetic rubber contract wins back in 2Q13 but still expect a decent showing for its 4Q13 results. While we deem its recent share price decline to be overdone, our fair value falls to S$1.80 (S$1.95 previously) due to the lack of a near-term catalyst. Downgrade to HOLD.
3Q13 results meet expectations
Goodpack’s 3Q13 results met our expectations with revenue growing 3.0% YoY to US$44.8m following continued gains from its synthetic rubber segment. Although operating expenses fell slightly by 0.4% to US$23.1m and operating profit increased by 7.5% to US$16.3m, higher financing expenses caused PATMI for the quarter to fall 5.9% to US$10.9m. In terms of its 9MFY13 performance, Goodpack’s top and bottom-line figures constituted 70.3% and 73.9% of our FY13 projections.
Share price fall related to weaker outlook by key clients
In our view, Goodpack’s 7% share price decline since Feb is largely due to knee-jerk reactions to the issuance of negative outlooks by its key synthetic rubber (SR) clients such as Lanxess and Goodyear (Goodpack receives ~55% of its revenue from the SR segment). However, the downcast projections related to weaknesses in Europe and other mature markets and growth from emerging markets such as China remained resilient. In addition, these clients did also state that they expect demand to pick up over the course of 2013.
Decent growth for 4Q13; pickup to come in FY14
Back in 2Q13, Goodpack had secured contracts with the two SR plants by Lanxess and Asahi Kasei in Singapore and had been ramping up its borrowings to expand its IBC fleet. Unfortunately, production at these plants (and use of its IBCs) has been delayed till 1Q/2QFY14. Therefore, we reduced our FY13 revenue projection to 7% and push-off the revenue pickup to FY14. Nonetheless, we expect Goodpack to post decent single-digit revenue growth for 4Q13.
Downgrade to HOLD for now
Following our adjustment, we downgrade the counter to HOLD as our fair value falls to S$1.80 (S$1.95 previously). We deem this move to be temporary until after its 4Q13 results, barring any deterioration in the macro-economic situation.
Goodpack’s 3Q13 results met our expectations with revenue growing 3.0% YoY to US$44.8m following continued gains from its synthetic rubber segment. Although operating expenses fell slightly by 0.4% to US$23.1m and operating profit increased by 7.5% to US$16.3m, higher financing expenses caused PATMI for the quarter to fall 5.9% to US$10.9m. In terms of its 9MFY13 performance, Goodpack’s top and bottom-line figures constituted 70.3% and 73.9% of our FY13 projections.
Share price fall related to weaker outlook by key clients
In our view, Goodpack’s 7% share price decline since Feb is largely due to knee-jerk reactions to the issuance of negative outlooks by its key synthetic rubber (SR) clients such as Lanxess and Goodyear (Goodpack receives ~55% of its revenue from the SR segment). However, the downcast projections related to weaknesses in Europe and other mature markets and growth from emerging markets such as China remained resilient. In addition, these clients did also state that they expect demand to pick up over the course of 2013.
Decent growth for 4Q13; pickup to come in FY14
Back in 2Q13, Goodpack had secured contracts with the two SR plants by Lanxess and Asahi Kasei in Singapore and had been ramping up its borrowings to expand its IBC fleet. Unfortunately, production at these plants (and use of its IBCs) has been delayed till 1Q/2QFY14. Therefore, we reduced our FY13 revenue projection to 7% and push-off the revenue pickup to FY14. Nonetheless, we expect Goodpack to post decent single-digit revenue growth for 4Q13.
Downgrade to HOLD for now
Following our adjustment, we downgrade the counter to HOLD as our fair value falls to S$1.80 (S$1.95 previously). We deem this move to be temporary until after its 4Q13 results, barring any deterioration in the macro-economic situation.
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