Goodpack's 1Q13 results came within our expectations: revenue rose 10.9% YoY to US$48.4m while operating profit gained 13.4% YoY to US$17.2m after overcoming a slight increase in operating expenses. Although financing costs for the quarter almost doubled to US$2.4m following an increase in borrowings, PATMI still came in 9.7% YoY higher to US$13m. Goodpack's good start to FY13 came on the back of a continued strong showing within the synthetic rubber segment, and we believe that this segment will persist on its growth trajectory with support from the automotive space and from key customers such as Lanxess. Our fair value estimate remains unchanged at S$1.85 and we maintain our HOLD rating. However, given the counter's 9.3% appreciation since our last report, we urge profit-taking for investors, and re-enter closer to S$1.80.
1Q13 results within expectations
Goodpack's 1Q13 results came within our expectations (-0.8% and -3.9% for top and bottom-line figures respectively). The group's revenue saw a 10.9% YoY increase to US$48.4m following continued growth from the Synthetic Rubber (SR) segment while operating profit rose 13.4% YoY to US$17.2m despite a 2.8% YoY increase in operating expenses, which was largely due to higher logistic and handling costs. With higher borrowings at the end of FY12, financing costs for the quarter almost doubled to US$2.4m although PATMI still came in 9.7% YoY higher to US$13m. On a FY13 basis, 1Q13 constituted 25.4% and 28.1% of our FY revenue and PATMI forecast respectively.
Synthetic rubber remains key segment
As previously stated in our last report (28 Aug), the group's strong start to FY13 has been tied to the SR segment. We maintain our reasoning that growth in the SR market - where Goodpack receives more than 50% of its revenue - will continue following support in the automotive space. One of its key clients, Lanxess, has reaffirmed an EBITDA growth target of 5% for CY2012 on the back of growth - albeit at a slower pace - in North American and Chinese car demand. Furthermore, Lanxess is investing substantially e.g. SR plant in Singapore due to open in 1QCY2013, in order to partake in the long-term growth potential of Asia.
Forecasts adjusted slightly
As a result of its increased borrowings, we adjusted our FY13 and FY14 forecasts slightly to account for higher finance costs. However, this small increase was offset by a reduction in logistic and handling expenses after we factored in more favourable rates for the group. Overall, PATMI for FY13 remained unchanged while FY14's rose 2% to US$49.8m.
Valuations unchanged; maintain HOLD
Despite the changes, our HOLD rating remains as our DCF-derived fair value of S$1.85 stays unchanged. Given the counter's 9.3% appreciation since the date of our last report, we deem upside at this point to be limited. As such, we urge investors to take some profit off and re-enter at a lower level around S$1.80.
Goodpack's 1Q13 results came within our expectations (-0.8% and -3.9% for top and bottom-line figures respectively). The group's revenue saw a 10.9% YoY increase to US$48.4m following continued growth from the Synthetic Rubber (SR) segment while operating profit rose 13.4% YoY to US$17.2m despite a 2.8% YoY increase in operating expenses, which was largely due to higher logistic and handling costs. With higher borrowings at the end of FY12, financing costs for the quarter almost doubled to US$2.4m although PATMI still came in 9.7% YoY higher to US$13m. On a FY13 basis, 1Q13 constituted 25.4% and 28.1% of our FY revenue and PATMI forecast respectively.
Synthetic rubber remains key segment
As previously stated in our last report (28 Aug), the group's strong start to FY13 has been tied to the SR segment. We maintain our reasoning that growth in the SR market - where Goodpack receives more than 50% of its revenue - will continue following support in the automotive space. One of its key clients, Lanxess, has reaffirmed an EBITDA growth target of 5% for CY2012 on the back of growth - albeit at a slower pace - in North American and Chinese car demand. Furthermore, Lanxess is investing substantially e.g. SR plant in Singapore due to open in 1QCY2013, in order to partake in the long-term growth potential of Asia.
Forecasts adjusted slightly
As a result of its increased borrowings, we adjusted our FY13 and FY14 forecasts slightly to account for higher finance costs. However, this small increase was offset by a reduction in logistic and handling expenses after we factored in more favourable rates for the group. Overall, PATMI for FY13 remained unchanged while FY14's rose 2% to US$49.8m.
Valuations unchanged; maintain HOLD
Despite the changes, our HOLD rating remains as our DCF-derived fair value of S$1.85 stays unchanged. Given the counter's 9.3% appreciation since the date of our last report, we deem upside at this point to be limited. As such, we urge investors to take some profit off and re-enter at a lower level around S$1.80.
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