Box-Pak sees revenue growth moderating

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KUALA LUMPUR (Apr 15): Box-Pak (M) Bhd expects current year revenue growth to moderate as the paper-based packaging products manufacturer contends with costlier raw material and more competition from global rivals.

Chief financial officer Ooi Teik Huat said Box-Pak (fundamental: 0.8; valuation: 2) might continue to face a challenging year in financial year ending December 31, 2015 (FY15). Ooi, however, said the firm would continue to improve operational efficiency to mitigate profit margin compression.

"Locally, we have the GST (Goods and Services Tax), resulting in the increase in our material cost. In Vietnam, we are facing a higher level of competition from players there," he told reporters after Box-Pak's annual general meeting here today.
Box-Pak is a 54.83%-owned subsidiary of Kian Joo Can Factory Bhd (fundamental: 1; valuation: 1.2) which in turn is a 32.9%-owned associate of Can-One Bhd (fundamental: 1.1; valuation: 1.8).

Box-Pak has reported weaker financials. Net profit shrank to RM7.85 million in FY14 from RM11.93 million a year earlier.

Revenue, however, rose to RM352.81 million from RM300.14 million.

Today, Ooi said despite the challenges that Box-Pak was facing, the company was looking at turning around its operations in Vietnam and Malaysia by FY15.
In Vietnam, the manufacturer's factory is in Hanoi. In Malaysia, its plant is located in Johor.

"We need a longer gestation period for both of these plants because Hanoi is a greenfield project, while the Johor plant is undergoing some integration process subsequent to our acquisition," Ooi said.

He said the Hanoi factory began operations in 4QFY13 while the Johor plant was started in January 2014.

At 12.30pm, Box-Pak shares fell two sen or 0.9% to settle at RM2.33 for a market capitalisation of RM139.9 million.

The stock saw thin trades of 3,000 shares.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)