Singapore Stocks Investing Strategy: DBS Vickers

This is a report issued by DBS Vickers on 26th August when the market sell down due to anticipation of QE tapering (now that we know that there is no QE tapering, we probably can expect a rebound in the STI)
In this report, they had recommended the following stocks:

1. Technology stocks are early recovery plays – CSE and Venture have significant exposure to US/Europe and offer attractive yields of 4.7% and 6.7% respectively. CSE’s proposed listing of its UK subsidiary could lead to a dividend bonanza on successful listing.
2. Selected industrials – Ezion and Goodpack will leverage on their niche positions in the global arena.
3. Stocks with earnings visibility supported by yield such as SingPost, Comfort Delgro,.ST Engineering and Hutchison Port

Click here to access the report

Other articles on SG stocks investing strategy
Hunting for Value In Singapore Stocks
SG Stock Investing Strategy: UOB Kay Hian
Invest Like Benjamin Graham in Singapore Stocks

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 

Broker's Recommendation (May 2010)

This is a compilation of all broker's recommendation in the month of May. These are 10 counters which were favoured by research houses in May. Brokerage house do not publish stock research reports on a stock frequently. Hence the coverage and opinions on these 10 stocks will be valid for this year until they initiate updated coverage. I hope that through this compilation, it serves to provide readers with some ideas on good tickers which are favoured by research houses

Finding undervalued Singapore Stock: Goodpack

Goodpack is engaged in renting its multi-modal, returnable metal box system, known as Intermediate Bulk Container (IBC). IBCs are used for the packaging, transporting and storage of cargoes. Through a network of subsidiaries, the Company provides a range of supply chain services and technical support to its clients globally.

Listed on the Singapore Exchange in 2000, Goodpack has emerged as No. 1 in the world in its business of supplying and leasing IBC. IBCs are able to provide customers with 20-40% savings over traditional packaging methods and Goodpack could lease its IBCs at half the rate that its competitors sell their containers for one-time use. Today it owns 1.7 million containers while its nearest competitor has 60000 containers of a different design.

Goodpack has a wide economic moat. As the world's largest provider of IBCs, it has clear advantages over its peers. Firstly, it allows the group to achieve economies of scale and greater trade-lane matching opportunities. Secondly, the sheer size of its IBC and market coverage also present a high barrier to entry for its competitors.

Besides its current business in natural rubber, fruit juices and synthetic rubber, the company is also looking into other new products such as automotive parts, chemicals, LCD panels & rice. The market value for each of the new products is huge. Beside targeting new product, the company is also looking into expanding its foothold into new countries such as South Africa, Taiwan, Russia and the Middle East

After going through Goodpack's business model, let's walk through the financial of the company to arrive at the estimated intrinsic value:

1. Sales revenue had been increasing every year from 26.6 mil in year 2001 to 102.4 mil in year 2009. Net income as well as cash flow from operations had been increasing consistently from year 2001 to 2009
2. Goodpack has future growth drivers in place. It is penetrating its services to new market such as autoparts, a market that is 10x times larger than current market. There are progress though slow in penetrating new markets
3. The company also has low debt-to-equity ratio. It also has high ROE of 15% and ROA of 8%
4. Goodpack require low CAPEX to maintain current operations

I like Goodpack for its good financials and great growth as well as the business model. Based on the DCF method, the stock's intrinsic value is at $2.02 which represent a margin of safety of 28% from its current trading price