Goodpack reported 1HFY12 results that were in line with our expectations: revenue grew 22.2% YoY to US$87.2m while PATMI climbed 8.1% YoY to US$22.5m. Both figures constituted 53.4% and 55.3% of our FY12 projections respectively. Going forward, we expect demand for Goodpack’s IBCs in 2HFY12 to remain stable at close to current levels as its main revenue segments, the natural and synthetic rubber businesses, continue to be supported by the automotive industry. In addition, price increases of between 9-12% on new IBC three-year contracts will take effect in 2HFY12 and provide some downside protection for Goodpack should demand taper off in the face of deteriorating macro-economic conditions. Reiterate BUY at an unchanged fair value estimate of S$1.70.
Goodpack results broadly in line. Goodpack reported a 19.5% YoY (-0.1% QoQ) growth in 2Q12 revenue to US$43.6m but PATMI fell 4.2% YoY (-9.7% YoY) to US$10.7m on the back of higher logistics and raw material costs. Its 2Q12 revenue was within 0.4% of our projections but the earlier than anticipated inclusion of IBC leasing expenses caused our bottom-line to deviate by 17.7%. However, on a half-yearly basis, Goodpack’s results were in line with our expectations: 1HFY12 revenue and PATMI constituted 53.4% and 55.3% of our FY12 projections.
2H revenue to remain stable. Going forward, we expect demand for Goodpack’s IBCs in 2HFY12 to remain stable at close to current levels as its main revenue segments, the natural and synthetic rubber businesses, continue to be supported by the automotive industry. In addition, price increases on new IBC three-year contracts will kick-in over 2HFY12 (average price increases per contract between 9-12%), which will help to offset any potential drop-off in demand should current macro-economic conditions deteriorate.
Cost control initiatives ongoing. Management is committed to addressing operating margin pressures, and has begun steps on implementing additional cost control initiatives. For instance, with its increasing market share and global presence, Goodpack has initiated a global RFQ system to consolidate bids to handle its shipping/transportation needs, which will allow Goodpack to monitor costs across various locations and potential provide cost savings.
Reiterate BUY at S$1.70. With downside protection via price increases, we raised our FY12F revenue projections conservatively by 2% to US$166.5m, and lowered our logistic and handling expenses by 3% as management continues to control costs further. However, although our FY12F bottom-line rose by US$2.5m to US$44.5m, it was partially offset by increases in IBC leasing expenses. Reiterate BUY at an unchanged fair value estimate of S$1.70.
2H revenue to remain stable. Going forward, we expect demand for Goodpack’s IBCs in 2HFY12 to remain stable at close to current levels as its main revenue segments, the natural and synthetic rubber businesses, continue to be supported by the automotive industry. In addition, price increases on new IBC three-year contracts will kick-in over 2HFY12 (average price increases per contract between 9-12%), which will help to offset any potential drop-off in demand should current macro-economic conditions deteriorate.
Cost control initiatives ongoing. Management is committed to addressing operating margin pressures, and has begun steps on implementing additional cost control initiatives. For instance, with its increasing market share and global presence, Goodpack has initiated a global RFQ system to consolidate bids to handle its shipping/transportation needs, which will allow Goodpack to monitor costs across various locations and potential provide cost savings.
Reiterate BUY at S$1.70. With downside protection via price increases, we raised our FY12F revenue projections conservatively by 2% to US$166.5m, and lowered our logistic and handling expenses by 3% as management continues to control costs further. However, although our FY12F bottom-line rose by US$2.5m to US$44.5m, it was partially offset by increases in IBC leasing expenses. Reiterate BUY at an unchanged fair value estimate of S$1.70.
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