Goodpack’s 3QFY14 revenue increased 14.2% YoY to US$51.2m while PATMI increased 20.2% to US$13.1m. Though 3Q is typically the weakest quarter, 3QFY14 revenue and PATMI increased 0.5% and 4.8% QoQ respectively due to stronger demand from synthetic rubber clients. The results met our expectations as 9MFY14 revenue of US$154.2m forms 73.5% of our FY14 forecast, while PATMI of US$39.4m makes up 73.2% of our expectation. There is steady progress in auto parts segment as Goodpack’s 9MFY14 revenue from auto parts clients doubled to US$2m, with acquisition of more tier one and tier two suppliers in the quarter. We continue to like Goodpack as it expands its footprint in the auto parts market while retaining market leadership in the rubber segment. As we roll forward our DCF model, we derive a new fair estimate of S$2.61 (previous: S$2.17) and upgrade Goodpack to a BUY.
3QFY14 results in-line
Goodpack’s 3QFY14 revenue increased 14.2% YoY to US$51.2m while PATMI increased 20.2% to US$13.1m. The strong set of growth comes from increased penetration in existing markets as a result of new customer conversion and increased demand from existing customers. Though 3Q is typically the weakest quarter due to lower demand from juice segment, 3QFY14 revenue and PATMI bucked the trend by increasing 0.5% and 4.8% QoQ respectively on the back of stronger demand from synthetic rubber (SR) clients. The results met our expectations as 9MFY14 revenue of US$154.2m forms 73.5% of our FY14 forecast, while PATMI of US$39.4m makes up 73.2% of our expectation. In 3QFY14, depreciation and amortisation expense increased 11.3% YoY to US$5.0m due to increase in Intermediate Bulk Container (IBC) fleet size; other operating expenses increased 7.2% to US$6.0m due to the increase in operating leasing expenses on the rental of the IBCs.
Steadily expanding footprint in auto parts
Goodpack’s 9MFY14 revenue from auto parts clients has doubled to US$2m, with acquisition of more tier one and tier two suppliers in the quarter. Management remains positive on the growth of the auto parts segment, and is taking measures such as expansion of sales headcount to bring more clients onboard. We see future growth in auto parts segment as coming from: 1) new clients, 2) existing clients transporting more parts through Goodpack’s IBCs, and 3) existing clients’ other regional offices. While management sees interest from auto parts manufacturers, the sales and approval process is a bottleneck. Not only does an auto parts manufacturer have to seek internal approval for each part separately, it also has to ensure the party it delivers to is agreeable with handling the IBCs.
BUY with S$2.61 fair value
We continue to like Goodpack as it expands its footprint in the auto parts market while retaining market lead
Goodpack’s 3QFY14 revenue increased 14.2% YoY to US$51.2m while PATMI increased 20.2% to US$13.1m. The strong set of growth comes from increased penetration in existing markets as a result of new customer conversion and increased demand from existing customers. Though 3Q is typically the weakest quarter due to lower demand from juice segment, 3QFY14 revenue and PATMI bucked the trend by increasing 0.5% and 4.8% QoQ respectively on the back of stronger demand from synthetic rubber (SR) clients. The results met our expectations as 9MFY14 revenue of US$154.2m forms 73.5% of our FY14 forecast, while PATMI of US$39.4m makes up 73.2% of our expectation. In 3QFY14, depreciation and amortisation expense increased 11.3% YoY to US$5.0m due to increase in Intermediate Bulk Container (IBC) fleet size; other operating expenses increased 7.2% to US$6.0m due to the increase in operating leasing expenses on the rental of the IBCs.
Steadily expanding footprint in auto parts
Goodpack’s 9MFY14 revenue from auto parts clients has doubled to US$2m, with acquisition of more tier one and tier two suppliers in the quarter. Management remains positive on the growth of the auto parts segment, and is taking measures such as expansion of sales headcount to bring more clients onboard. We see future growth in auto parts segment as coming from: 1) new clients, 2) existing clients transporting more parts through Goodpack’s IBCs, and 3) existing clients’ other regional offices. While management sees interest from auto parts manufacturers, the sales and approval process is a bottleneck. Not only does an auto parts manufacturer have to seek internal approval for each part separately, it also has to ensure the party it delivers to is agreeable with handling the IBCs.
BUY with S$2.61 fair value
We continue to like Goodpack as it expands its footprint in the auto parts market while retaining market lead
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