For QE31/12/2018, Boxpak slipped back into the red again. It reported a net loss of RM8.4 million as compared to a net profit of RM1.2 million in QE30/9/2018. Revenue rose 3% q-o-q or 20% y-o-y to RM173 million due mainly due to increased sales volume in Q4, 2018.
Boxpak recorded a loss before taxation of RM6.1 million, compared to a profit before taxation of RM1.0 million in Q3, 2018, due to a pre-operating loss of RM1.3 million for its Myanmar plant; higher unrealized foreign exchange losses in Q4, 2018; and, lower gross profit of RM12.7 million as compared to RM15.4 million (due to higher manufacturing expenses in Malaysia and Vietnam).
Table: Boxpak's last 8 quarterly results
Graph: Boxpak's last 55 quarterly results
Due to its rapid growth, Boxpak's financial position is a bit stretched. Liquidity is tight with current ratio at 1.0 time as at 31/12/2018 while gearing is elevated with total liabilities to total equity at 1.8 times.
Boxpak (closed at RM1.27 last Friday) is now trading at a Price to Book of 0.6 time (based on NTA per share of RM2.08).
Boxpak has broken above its downtrend line at RM1.00 at the end of December last year. It should find support at this breakout level of RM1.00, which is also a psychological support level.
Chart 1: Boxpak's daily chart as at Feb 22, 2019 (Source: Malaysiastock.biz)
Chart 2: Boxpak's monthly chart as at Feb 22, 2019 (Source: Malaysiastock.biz)
As Boxpak has fallen back into a loss-making position, the case for buying this stock for a recovery play is negated. However, due to its deeply discounted share price, I would rate Boxpak as a HOLD while we await a more definite turnaround in its financial performance.