Goodpack pops the champagne on 7.2% profits surge

But will it sustain its momentum?

According to OCBC Investment Research, Goodpack’s 1QFY14 results came in within expectations with revenue increasing 7.7% YoY to US$52.1m following greater demand by customers in the rubber industry.

The company also managed to keep a lid on the pace of operating costs increases – despite incurring higher depreciation and financing costs from having a larger IBC fleet – and operating profit and PATMI grew by a corresponding 11.8% YoY to US$19.3m and 7.2% to US$13.9m, respectively.

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Although this bottom-line increase was partially aided by one-off foreign currency gains (US$860K gain vs. US$679K loss in 1QFY13), there was improvement on a core basis QoQ, which gives us comfort that opex increases have remained in check.

Top-line growth to continue; opex should be manageable
For the remaining quarters, we expect top-line growth to sustain as its key clients’ synthetic rubber (SR) operations in Singapore ramp up operations.

In terms of margins, we had previously projected some deterioration in 1QFY14 as a result of having a larger IBC fleet but 1QFY14 margins have held up well on a YoY basis so there is some cause for optimism for the rest of the year.

In addition, we also expect leasing costs to taper off gradually as Goodpack continues to shift towards purchasing a larger proportion of IBC additions.

As for financing costs, the bulk of its debts have fixed rates so we are unconcerned over a potential hike in rates.