Goodpack Limited's revenue jumped 6.4%

Check out which segment drove this momentum.

According to OCBC Investment Research, building on its strong 1Q13 performance, Goodpack's 2Q13 results saw revenue increase by 6.4% YoY to US$46.4m following continued growth from its Synthetic Rubber (SR) segment. Operating profit for the quarter increased by a corresponding 15.4% to US$16.2m - despite operating expenses rising by 7.1% YoY to US$31.8m - and PATMI gained 4.0% YoY to US$11.1m.

Here's more:

In terms of its 1H13 performance, Goodpack's top and bottom-line came in within our expectations (-0.2% and +3.7% respectively) with the figures constituting almost 50% and 52% of our FY13 revenue and PATMI forecasts respectively.

Currently, the SR segment contributes almost 55% of the group's revenue, and this figure looks set to grow further as Goodpack's penetration within this market continues to yield encouraging results.

Aided by the continued growth in demand from the automotive space (i.e. passenger tyre demand) - and the completion of several SR plants in Singapore from now till 2015 - we expect to see Goodpack grabbing greater market share going forward.

For instance, Goodpack has already secured contracts to service the two new SR plants in Singapore (Lanxess and Asahi Kasei).

We raise our revenue forecasts for FY13 and FY14 by 2% and 5% respectively to account for the higher revenue contribution from the SR segment. We also factored in higher financing costs following an increase in borrowings for the Group but this was offset by a corresponding reduction in operating expenses. As a result, our PATMI increases by 2.4% and 5.6% respectively for FY13 and FY14.

With the improved projections, our fair value now increases to S$1.95 (S$1.85 previously). Upgrade to BUY. (Lim Siyi)

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