Boxpak: Finally Profits Came!

Background

Box-pak (Malaysia) Berhad ("Boxpak") is one of the leading corrugated carton and die cut trays manufacturers in the Asean region. It has 2 plants in Malaysia (Selangor and Johor), 2 plants in Vietnam ( Hanoi adn Ho Chi Minh) and 1 plant in Myanmar (opened this year). The group has 1400 employees and plant capacity of 175000 MT. It is a subsidiary of Kianjoo.

Result Update

For QE30/9/2018, Boxpak returned to the black after 7 quarters of losses. It made a net profit of RM1.2 million on a revenue of RM168 million. Group revenue rose 12.6% q-o-q mainly due to increased sales volume in Q3, 2018. Gross profit increased from RM11.3 million in Q2, 2018 to RM15.4 million in Q3, 2018, as a result of higher sales tonnage and improved margins contributed by higher selling prices. Consequently, the Group recorded a profit before taxation of RM1.0 million in Q3, 2018 as compared to a loss before taxation of RM2.8 million in Q2, 2018.


Table: Boxpak's last 8 quarterly results


Graph: Boxpak's last 54 quarterly results

Financial Position

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 30/9/2018 while gearing is elevated with total liabilities to total equity at 1.7 times.

Valuation

Boxpak (closed at RM0.87 yesterday) is now trading at a Price to Book of 0.40 time (based on NTA per share of RM2.15).

Technical Outlook

Boxpak has been sliding for the past 3 years, from a high of RM3.00 to a recent low of RM0.87. There is no sign yet that it is even attempting to make a bottom. That might change with the report of its first quarterly profit after nearly 2 years.


Chart: Boxpak's monthly chart as at Nov 21, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on its return to profitability and deeply discounted share price, Boxpak could be a good stock for long-term investment. Share price recovery will come slowly and it will be dependent on the continuity and magnitude of its profitable financial performance.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.