Goodpack

Goodpack: 2QFY14 results in line. Net profit climbed 12% y/y to US$12.5m, while revenue rose 9.8% to US$50.9m, as a result of new customer conversion and higher demand from existing customers, for its returnable Intermediate Bulk Container (IBCs) packaging solutions. Overall, expenses inched higher, a result of higher operating expenses of leasing its IBCs and interest expense on addition loans taken to finance the company’s expansion plans. Net gearing for the company remains low at 27%, and HSBC expects a modest recovery in automobile, tyre and rubber demand in the longer term to support Goodpack’s growth since it mainly transports rubber. CIMB reckons Goodpack can capture growth in the synthetic rubber segment as there is a low penetration rate for IBCs in this industry relative to natural rubber, and thinks that much-anticipated OEM auto parts contract would be key re-rating catalyst in the long term That said, HSBC and CIMB guides that near term upside remains limited. HSBC maintains Neutral with TP of $2.15. CIMB maintains Add with decreased TP of $2.15 (from $2.23)