Sunday, May 12, 2013

Undervalued SG stock: Goodpack update

I first wrote about Goodpack as an undervalued stock when I started the blog 3 years ago. Three years on, I still feel that Goodpack is a good stock and is one of the undervalued stocks listed on the SGX. The following blog post is a brokerage report on Goodpack issued by DBS Vickers on 19th March.

In the report, they had recommended investing in Goodpack. Below is the excerpt from the report on the investment thesis on Goodpack:

•        Russian market and new Lanxess plant in Singapore to drive stronger growth from 2Q13
•        Gaining traction in autoparts segment
•        Recent price weakness is a buying opportunity

Shifting to faster gear. Goodpack should see stronger growth from 4QFY13 (FYE June) with new contracts from the Russian market and Lanxess’ new plant in Singapore. Momentum should continue into FY14 with the pickup in rubber trade volume on the back of pent up demand in the replacement tyre market, which constitutes c.53% of total rubber demand, following 20 months of weakness. In addition, cost savings from the global tender exercise will help to improve net margins by an estimated 1ppt. We expect these to fuel FY14/15F net profit growth of 25%/16%.

Gaining traction in autoparts segment.  Goodpack has been knocking hard on the doors of GM’s OEMs and suppliers as well as a few other automakers. Hundreds of samples have been sent for testing and we understand that the company is making progress with a few suppliers in Europe. Future announcements of autopart contracts should be a share price catalyst. 

To read more on Goodpack, please click here 

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