Plastoform

Plastoform: 1Q12 results. Revenue at HK$96.5m, +82% yoy. In line with business strategy, ODM turnover doubled yoy to HK$65.2m, while OEM turnover decreased 27.% yoy to HK$15m. Products under Private Label generated HK$16.3m revenue. The co turned a gross profit of HK$6m, vs gross loss of HK$2.6m last yr, driven by tightened control on material cost and high pdt margin in newly developed pdts. Net loss narrowed to HK$1.3m, from HK$10.6m yoy, and would have been close to break-even if not for the legal and professional fees arising from the recent 3-for-1 rights issue (issue px of 1.5cts/sh). Qoq, revenue was down 36% due to seasonal factors. As a result, the co recorded a HK$17.8m profit in 4Q11. Going forward, mgt pledges to keep a tight rein over costs as well as improve pdtvity and working capital efficiency. The co reduced direct labor headcount by 30% in 1Q12. Its model will not move toward pro-actively developing pdts for customers instead of waiting for customer to come forward with the ideas. The co expects to launch a number of new lifestyle pdts that will keep its pdtn facilities fully utilized. In addition, SGX has extended the deadline for Plastoform’s removal from Watchlist by 12mths to 4 Mar ’13. The stock trades at 2.6x P/B, on last done at 3.6cts on above avg volume.