HOLD S$1.64 STI : 2,748.18
Upgrade from Fully Valued
Price Target : 12-Month S$ 1.69 (Prev S$ 1.52)
Reason for Report : FY11 Results/Earninings and TP upgrade
Catalyst: Weaker than expected global economic growth
DBSV vs Consensus: Lower FY12-13 earnings on increased macro risks
• FY11 PATMI of S$43.2m (+29% y-o-y) slightly ahead of expectations on higher share in rubber
• FY12-14F EPS increased by 2-4% on higher IBC (Intermediate Bulk Container) fleet and lower tax
• Upgrade to Hold, TP raised to S$1.69
Profit slightly ahead. Goodpack reported FY11 PATMI of S$43.2m which was ahead of consensus and our expectations of S$42m. 4QFY11 net profit stood at S$11.8m (+57% y-o-y, +11% q-o-q). Final DPS of S$0.02 and S$0.01 special dividend declared.
Revenue up 29% y-o-y The strong FY11 result was driven by rise in revenues to S$158.8m (+29% y-o-y) on the back of gains in natural (NR) and synthetic rubber (SR) where market share now stands at 38% and 27% respectively, from 36% and 22% in prior year. EBITDA margins fell to 44.8% from 46.6% in FY10 due primarily to higher leasing costs. We expect the downward trend in margins to continue as the company increases its reliance on renting IBC’s rather than a 100% ownership model. PATMI margins were flat at 27.3%, raised by a lower tax rate of 12.1% (14.9% in FY10).
FY12-14F EPS revised up by 2-4% After imputing slightly higher IBC additions for FY12 (210k versus 180k previously) as some customers are experiencing a shortage of IBCs, higher utilisation rate of 53% given run rate of 55%, reduction in annual rental costs to US$17 per IBC addit and lower tax rate of 14%, we have revised FY12-14F EPS up by 2-4%
Upgrade to Hold, TP raised to S$1.69 Post earnings revisions, we raise TP to S$1.69 from S$1.52. Following recent share price correction and revised TP, we upgrade to Hold. We believe Goodpack is fairly valued at current level, given flattish earnings growth over next 2 years on increasing macro risks and rising Singapore dollar.
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