Colorpak’s HY13 results were released recently, and are now giving a picture of what the entity will look like post-consolidation.
HY13 figures are as per below:
EBITDA: 10.7m (11.5%)
NPAT: 4.7m (5.1%)
On the surface, it appears Colorpak have transitioned quite well through the CHH acquisition, emerging with a business double the size. While EBITDA margins have fallen from an average around 18%, they are improving. The emerged business now has net assets of 86c per share, debt/equity of 47%, and generated free cash flow of $7m (8.7c per share) in HY13. The fall in revenue is attributed to the loss of a number of low-margin CHH accounts.
Management has also done a sterling job consolidating operations, with headcount falling 16% from 820 to 690. HY dividend has increased to 1.75c. Having been roughly break-even on my shares the past 2 years, one could be tempted to sell out after the recent rise in price from 55c to Monday’s close of 73.5c. But I’m pretty bullish on CKL over the next 2 years, given not many are aware of the business, and EBITDA margins should continue to improve, I’m anticipating a big re-rating of CKL by the market over this period. I will continue to hold and am considering adding to my current position.