Good news for Goodpack: Shares hit new highs on takeover talks

KKR's proposed bid is coming to a close.

Goodpack's shares have been recording new highs as talks on KKR's planned bid for the company progress.

According to OSK, Goodpack announced yesterday that it has progressed in its talks with one party regarding a transaction that could result in a bid for the company. OSK noted that the stock is currently trading at 19x FY14E on its estimates, and it believes any private market transaction could price the stock at SGD2.60-3.00, representing PER of 20-24x FY14E.

Here's more:

According to the media, the party is private equity firm KKR, which is currently in an advanced stage of discussion with Goodpack. Goodpack is the global leader in the seaborne transportation of natural and synthetic rubbers, with market share of 40% and 32% respectively.

Its fleet of 3.2 million IBC boxes offers an environmentally-friendly and cost-competitive packaging solution overconventional steel drums and wooden pallets.

Long-term contracts with its MNC customers and market share gains in the synthetic rubber segment will underpin steady earnings growth of 10-15% p.a. for the group over the next few years, while any breakthrough in the auto parts segment will extend its growth well into the next decade.

Recognising that getting qualification from auto brand manufacturers is a lengthy process, the company has tweaked its strategy to focus on getting qualified by tier-1 and tier-2 suppliers of automotive OEMs for the transportation of auto parts, and progress is being made with steady ramp-up in volume throughput.

Goodpack recently reported 3Q FY14 results with net profit rising 20% to USD13m, while 9MFY14 net profit was higher by 10% to USD40m.

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