About 20% of Goodpack’s current revenue is derived from Europe, with the bulk from exports out of this region. So far, mgtm has not detected any slowdown in box movements. Instead, we think that the slide in the Euro could give exports a lift and, in turn, the utilization of Goodpack’s boxes. Almost all its Intermediate Bulk Containers (IBC) are committed to customers on long-term pacts of at least 1-3 years.
These agreements typically cater for a minimum off-take, with the flexibility to increase the number of turns and/or rental days. This implies a resilient business model that is generally unaffected by near-term trends. Mgmt has been quietly beefing up the group’s operational efficiency, with its SAP system due to go live in July after a 9-mth preparation. Maintaining our BUY rating with TP of $2.18, based on 20x FY11F. We expect net profit to grow at 26% CAGR in the next 3 yrs.
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