Goodpack: Above expectations (DMG)

(NEUTRAL, S$1.65, TP S$1.78)

4QFY11 earnings was above our expectations, hitting US$11.8m (+57.2% YoY; +10.9% QoQ),

mainly on the back of lower than expected expenses. 4QFY11’s strong showing was as a result

of a surge in revenue, coming in at US$45.5m (+32.5% YoY; +9% QoQ), that is attributable to

increased penetration in existing markets as a result of new customer conversions, as well as higher demand from existing customers. Our FY12 and FY13 earnings is lifted by 12.7% and

8.3% respectively, with lower revenue offset by lower expenses. Based on DCF valuation (a

higher WACC of 10% versus 9.9% previously; a lower terminal growth rate of 0.5% versus 2%

previously), our TP is lowered to S$1.78 (S$2.06 previously). Maintain NEUTRAL.

4QFY11 above expectations. 4QFY11 earnings came in stronger than expected, hitting US$11.8m (up 57.2% YoY), on the back of lower than expected expenses. 4QFY11 earnings was boosted by a strong growth in revenue, which came in at US$45.5m, up 32.5% YoY and 9% QoQ. This was on the back of acquisitions of new customers and increased demand from existing ones.

Automotive segment a medium term catalyst. Goodpack is currently conducting trials with 20

global car manufacturers and parts suppliers in the automotive industry. While feedback have

been positive so far, we believe that Goodpack earnings will still be predominantly driven by the synthetic rubber segment in the next 2-3 years. Any significant contribution from the automotive segment may commence only from FY13, at the earliest.

Lifting earnings estimates. On the back of current uncertainty in global trade, we have lowered our FY12 and FY13 revenue estimates by 12.5% and 11.5% respectively. This is offset by a reduction in estimated expenses, thus raising our FY12 and FY13 earnings by 12.7% and 8.3% respectively. We now estimate FY12 and FY13 earnings to come in at US$48.2m and US$53.8m respectively. Based on DCF valuation methology (a higher WACC of 10% and a lower terminal growth rate of 0.5%), our TP is lowered to S$1.78.