Rpc Share Discussion Threads

[builder bob] 23/3/2017 08:58

A bit of short- trading jiggery here perhaps? And where has Spoole5 come from.

[spoole5] 22/3/2017 20:32

Thing is all the top brokers are afraid to criticise the company because of the constant flow of deals they want to earn fees from. This could be a house of cards waiting to fall down.

[value viper] 22/3/2017 20:20

search FT report , Northern Trust accusing co of aggressive accounting practices !?
Some damning statement really and clearly whats done the damage today for sure
i wonder what the company will have to say about that......cause i think they might have to address it

[sogoesit] 22/3/2017 16:47

Yes, pre-close trading statement on 30th

[from8to800] 22/3/2017 15:30

Isn't the update due on the 30th?A bit too early for that stop chase isn't it?

[esther1975] 22/3/2017 15:16

Classic timing before trading update to get shares on the cheap. The story hasn't changed let's see what the trading update brings

[shauney2] 22/3/2017 14:36

"management sold a significant amount of stock"

2 directors sold post exercise but not all.Will be interesting how far this can be taken down.
Could be a good buying opportunity after the trading update next week.

[spoole5] 22/3/2017 14:22

This is how capita got so big, endless acquisitions, look what happened to them. Always wary of companies trying to buy growth.

[philanderer] 22/3/2017 13:37

Sell note out from Northern Trust this morning..


PM
Blimey -- seen this Northern Trust going for RPC Group
PM
Going at them hard
PM
Paul Moran round there
11:32 am
RPC Group PLC (RPC:LSE): Last: 889.67, down 21.33 (-2.34%), High: 920.09, Low: 889.33, Volume: 685.08k

PM
Let them do the talking on this one

PM
Plastics and stuff, isn't it?

11:33 am
PM
We believe RPC is a business that is stuck in a structurally weak position, caught between a weakening relative price position with customers and its labour cost inflation. These trends will worsen we think. It is our view that management is
using a dramatic step-up in acquisitions in the last 12 months (10 deals and a doubling of revenues) and some of the most aggressive accounting we have seen, to help mask these risks. Given a history of weak free cash flow generation (FCF)
and a levered balance sheet, RPC’s acquisitions require rights issues – and therefore, a compelling equity story. This is an equity story the sell-side has been very bullish on for many years, perhaps because of underwriting deal fees on offer.

PM
Multi-year restructuring programmes and acquired synergies have delivered surprisingly little real gains in true net income or FCF in our view. Innovative management incentives and definitions of returns on capital or return on assets, are
encouraging value destructive deals we think. This can be clearly recognised in the erosion of returns on capital, which on our analysis, are now well below the cost of capital. After the FY16 accounts, where the raw material tailwind effect failed
to materialise, management sold a significant amount of stock. In H1, this tailwind effect was even weaker on our analysis. We think consensus assumes the drag from one-off costs disappears and ‘adjusted’ profit matches the true underlying profit figure.

PM
We disagree and believe that a strategy to buy industry peers in other segments or geographies, with modest synergies, doesn’t alleviate structural threats of pricing power and cost inflation, it just reinforces them. We accept that a rights-issue funded, value destroying roll-up story can continue to report ‘adjusted’ EPS growth for as long as shareholders are willing to fund it. But should the hitherto supportive appetite for rights issues fade, we think shareholders will find a structurally challenged, low margin, highly levered, sub cost of capital business trading on c.23x Mar-18 P/E on our estimates, an undeserved 50% premium to the market. The unusually poor reaction from the market to a recent large acquisition suggests to us that cracks in the story are beginning to appear. We think it is best to get out now.

Sell.

[ed 123] 21/3/2017 10:08

The market feels like some of the rights issue share are still sloshing around. When they find longer term holders I think the share price can begin its move towards £10. (Just my view.)

[spooner27] 13/3/2017 12:52

Hi cheshire

Yes definitely sooner that expected which is good news. Whats interesting is that they have stated that Letica's EBIDA has continued to increase. EBITDA for 12 months ended 31st dec 2016 has increased to $67 million from 12 months ended 30th June 2016 of $57 million. An increase of $10 million in past 6 months. Pretty good. Therefore as they correctly state the multiple paid has reduced from 8.5 to 7.3. However this multiple is expressed in dollars, not pounds, and therefore interesting to see what they actually paid in pounds for letica. My understanding is that around 70% of RPC'S profits are earned in other currencies therefore when converted into pounds, this would have a beneficial effect on profits (due to weak pound 1.22)

[cheshire pete] 13/3/2017 12:05

Good morning Spooner,
Completion announced this morning, 17 days ahead of your hoped for date. That's one of the things I like about this company: under promise and over deliver. They'll be knocking on the FTSE 100 door soon. If they're not in the FTSE 100 by 2020 I'll eat my proverbial.

[spooner27] 10/3/2017 13:09

Will be interesting to see if the announce acquisition of letica on 30th March. They previously stated they had agreed a purchase price of $490 million dollars or £391 million pounds. Since then the pound has weakened against the dollar so potentially making acquisition more expensive unless they have hedged

[ed 123] 10/3/2017 10:28

Nice start today (+20p), trading at 930p. Back up to Terp?

Underwriters' rump found longer term homes?

Sticking my neck out, 30th march pre-close statement could see a return to 1000p

[sogoesit] 06/3/2017 19:14

Lol @ from8to800!
There's a strategy that says Buy above the 200 day ma and sell when below.
I hope to accumulate tomorrow.

[esther1975] 06/3/2017 12:27

Ha ha I love that response. Bought a few more today. Looks good value

[esther1975] 06/3/2017 12:01

What is the 200 day moving average

[from8to800] 06/3/2017 11:06

I agree with Ed. I think this may be setting to shake out some weaker holders possibly by going down to the 50 week (200 day) moving average to find support there. It's done so in the past.
The results on the 30th will be the spark that makes it pop back up - IMO.

[ed 123] 06/3/2017 10:46

Agree but, as you say, only slightly. The 1980's acquirers were often conglomerates, and tempted into businesses that they were less familiar with. RPC knows packaging and sticks to that. They look very carefully before agreeing - go for deals that enhance earnings not later than the following accounting year.

I've taken the view that this share price weakness is connected with the 4% that went to the underwriters. The market got a bit overfaced this time. Over the next few months, I'd expect the share price to recover from the rights issue dip.

Added some more this morning. (No advice intended.)

[essentialinvestor] 06/3/2017 09:22

This is slightly reminiscent of the acquisitive growth companies of the 1980's,
where one RI followed another.

[typo56] 17/2/2017 14:03

And, as we know, the TERP may have been deflated as some thought it was already ex-rights before Friday.

[shauney2] 17/2/2017 13:50

The TERP is what i gauge the current price to.Hence my comment the other day that i was tempted under 930p

Anyway the current price won't really matter when Kraft or Amcor bid 15 quid a share.

[sogoesit] 17/2/2017 12:03

You are right Typo; my comment was addressed to ali47fish, but I may also have misunderstood his comment.
In any case, price targets are about 1100p+ and currently, if you are not a nil-paid rights holder able to sell, the cost of acquisition is around 900p... well it was a few hours ago....as apparently some folks have noticed the value ;-)

[typo56] 17/2/2017 11:52

Sogoesit, I may be wrong but I took it to mean that ali47fish was saying 900p is not as good as someone taking up their rights at 665p. I was pointing out that the cost of taking up the rights is not just 665p, it's also the value you lose in the price you could have got selling your RPCN rights.