Smurfit Kappa Share Discussion Threads

[ygor706] 26/8/2016 11:35

Chart looking much better now!

[moorsie2] 25/8/2016 10:46

Containerboard price increases announced yesterday - hence the run on the share price

Will break through 19 no problem over the next week

[ygor706] 25/8/2016 08:22

The share price has been trending gently upwards throughout August but, to my mind, we need to get to c£19 to cement the overall direction. Let's hope that we don't get a large downward correction once the big players get back from the beaches in Sept.

[soundbuy] 29/7/2016 13:48

Schroders did well to pick up that amount yesterday..............

[ygor706] 29/7/2016 10:13

See that Davys the Dublin broker is pretty bullish after the results. They are forecasting continued growth and a strengthening in the share price Given that the share price bit is not happening at the moment suggests to me that one of the bigger shareholders may be adjusting his book!

[moorsie2] 27/7/2016 19:34

strong results - today looks like profit taking after recent bounce.

I would expect it to recover further in the coming week get back to 1950

[soundbuy] 27/7/2016 12:10

My thoughts too, though a positive finish would not surprise........

[ygor706] 27/7/2016 08:51

Disappointing share price reaction given a solid, if not spectacular, set of numbers and a dividend hike. Tone of statement was positive and SKG not on a demanding PE. Hope for better going forward.

[capercaillie] 27/7/2016 07:22

Nice 10% dividend increase.

[ygor706] 26/7/2016 17:23

I topped up yesterday and there was a good tick up today in front of tomorrow's results. A lot has happened to SK since the last numbers were published so an update will be good.

[soundbuy] 14/6/2016 09:19

Schroders' been dumping a few over the week, was hoping for a touch of a squeeze liquidity wise towards FTSE 250 inclusion, looking unlikely now.........

[moorsie2] 10/6/2016 10:03

Significant correction this week - almost 10% down on euro price

When a broker note comes out updating a price target to 28. Strange- could be traders trying to profit on people taking a position before the Ftse listing and trying to shake the loose holders out..

[moorsie2] 05/6/2016 14:50

6 times more shares traded on Friday than the average day so far this year..


Augers well .

[soundbuy] 02/6/2016 12:03

HT FT/AV

Jefferies

We see this as the first of three re-rating catalysts to erode SKG’s 10%-15% discount to European packaging peers. Second catalyst is Smurfit Kappa’s London Capital Markets Day, on Friday, June 3 and Third catalyst: Formal FTSE 250 index inclusion as of close of business on June 17.



Next Catalyst: June 3 London CMD: Smurfit Kappa hosts Capital Markets Day on Friday, June 3: (9am at London Stock Exchange), with management including Tony Smurfit CEO & Ken Bowles CFO providing detailed business overview: covering topics such as: Europe, Americas, Innovation and M&A.

Valuation Discount to Peers: Smurfit Kappa trades on consensus CY16 11.3x PE & 7.5x EV/EBITDA with 8% FCF yield, a 10%-15% discount to European packaging peers. We view Smurfit Kappa’s UK listing & FTSE index inclusion, broadening its pool of potential investors as key to unlocking this valuation discount to peers over time.

Recap on Smurfit Kappa Investment Case: Market leader in European & Latin America corrugated boxes, benefiting from: 1) European Industrial Production/Retail sales growth. 2) Market share gain (20% Pan European sales). 3) E-commerce growth, boosting corrugated packaging demand. Additionally, Smurfit Kappa allocates capital to consolidation of fragmented European & American corrugated markets.

Valuation/Risks
Retain unchanged 2016 estimates: €1,259m EBITDA & €2.06 EPS. Retain unchanged €29 PT, based on 8.2x CY16E EV/EBITDA, in line with packaging peers. SKG trades on consensus CY16 11.3x PE & 7.5x EV/EBITDA with 8% FCF yield, a 10%-15% discount to European packaging peers. Key risks: 1) Volume demand, 2) Price outlook, 3) FX.

[moorsie2] 30/5/2016 18:42

Could be a very good week for this share with news on Wednesday that it is accepted into the FTSE 250 or even 100

Normally it brings a boost to volumes and values

[moorsie2] 01/3/2016 15:00

Interesting news article today - indicates that SKG will apply for a full listing in May which means that it will easily make the FTSE100 review in 1st week of June. Then this will be added by lots of Institutional Holders to ensure they track the FTSE 100

Good buying opportunity before it gets priced in to the share price in the coming weeks...


Smurfit Kappa group’s shares commenced trading in sterling on the LSE this morning. Ordinary shares on the Irish Stock Exchange will continue to trade in euro.

It is one step in the overall process in seeking a primary listing on the LSE but does not yet represent formal application.

Smurfit Kappa will formally apply for the primary listing following the publication of the group’s annual report.

The process is expected to complete 20 days post application when the company will likely be eligible for FTSE membership.

According to Goodbody Stockbrokers, "Smurfit Kappa remains our favoured stock in our paper and packaging universe with the most undemanding valuation and good visibility on earnings growth in the
year ahead."

[moorsie2] 30/7/2015 08:35

Broker upgrade to 33 euro released last night and reinstated as a buy after these results.

[davestum] 12/4/2015 22:36

Someone sold 3.3M Euros worth of shares late on Friday. Either they know something I don't or it looks like a horrendous move given the latest news.

[toolsmoker] 12/4/2015 11:10

All over the news and papers surely the company has to issue rns regarding this first thing

[moorsie2] 17/3/2015 09:12

Based on this latest broker report I can see a 12 month price of 31-35. So still good upside

[envirovision] 17/3/2015 09:09

I must say you called this well Moorsie, I have been following since mid Jan, but felt i missed the boat

[moorsie2] 17/3/2015 08:57

NEW YORK, 16 March 2015 (Viewpoint) - excerpt from Vertical Research Partners

SKG Hikes Recycled Containerboard Prices €60/tonne - Friday evening, RISI reported that Smurfit Kappa has announced a €60/metric ton (tonne) recycled containerboard price hike effective April 1st for all of the Continental European markets. This move follows DS Smith's (SMDS-LON: Buy - £4.70) announcement of a €40/tonne price increase on February 26th as well as Smurfit Kappa's previous announcement that they are raising virgin (kraft) linerboard prices €40/tonne on February 12th. We believe most, if not all of this price increase will go through given the weak Euro and the record spread between US and European containerboard prices.

Pricing Spread vs. US Still Remains At All Time Record - At Friday's 1.05 USD per Euro, without any price increases (either in the US or Europe), US kraft linerboard is trading at an all-time record spread versus German kraft linerboard. Historically, German 175g Kraftliner (converted to US dollars and short tons) has traded at a $66 premium to US 42-lb linerboard (list price) from 1996 to today. Currently, the German price is trading at a record $161 discount. Even if the European industry is successful in implementing the full €40/tonne per ton price hike on virgin linerboard, the German price would still be at near record $123 discount to US prices. We note that Europe is short virgin containerboard and has historically imported board from the US, a trend we do not see changing in the near future.

Containerboard Pricing Still Needed in Boxes - Though we believe linerboard and medium prices are likely to go higher, it will continue to be a challenge to pass along those prices into boxes. However, the European industry has historically passed along containerboard price increases into boxes with a roughly 6-month lag. Though the economy in much of Europe remains soft, we believe that the industry will succeed and Smurfit Kappa will see better margins in the back-half of 2015.

More Pricing Likely to Come - Should the Euro remain near parity versus the dollar, we believe that the European markets will see significant pricing in the coming months and years. At the moment, we are only building in a 6% back half 2015 price increase into our model and another 6% in the back of 2016. We are also building in roughly 4% total cost inflation this year and 6% total cost inflation next year. As a result, our 2015, 2016 and 2017 estimates rise to €2.20, €3.10 and €3.25 from €2.00, €2.70 and €3.10, respectively. Should pricing in the region rise enough to get European prices closer to the historic spread versus the US and/or should cost inflation be more subdued than we are currently modeling, we could see further upside to our estimates despite being well ahead of the Street.

Even with Raised Target, Still At a Discount vs. Global Peers - As a result of our higher estimates, we are raising our target on Smurfit Kappa €4 to €31 per share from our previous target of €27. Though we are slightly raising our EBITDA and PE multiples for the stock, it would only bring the company close to in line with its global peers. Furthermore, if the market begins to look past 2015 and starts to value the stock closer to our 2016 estimates, we could see the stock move much higher than our current target.

Does IP Want To Get Big in Europe? - As we have stated in previous notes, we believe that International Paper (IP: Buy - $60 Target) may be interested in expanding into Europe and slowly help to consolidate the market over the next decade. We believe Smurfit Kappa as an obvious (and well-priced) method for IP to quickly gain a major market position in the region and believe that the two mill and box plant systems could have significant synergies with each other. Furthermore, if an investor believes the long-term outlook for the Euro versus the US dollar is higher than the currently depressed levels, IP could buy the company at a currency imposed discount.

Containerboard Arbitrage Needs To Close

US kraft linerboard is trading at an all-time record spread versus Germany. Historically, German 175g Kraftliner (converted to US dollars and short tons) has traded at a $66 premium to US 42-lb linerboard (list price) from 1996 to today. Currently, the German price is trading at a record $161 discount. Even if the European industry is successful in implementing the full €40/tonne per ton price hike on virgin linerboard, the German price would still be at near record $123 discount to US prices. We note that Europe is short virgin containerboard and has historically imported board from the US, a trend we do not see changing in the near future.

Stock View

Looking at Smurfit-Kappa on purely a valuation basis, we quickly come to the conclusion that the stock is very attractive, and thus our €31 target price and Buy rating. However, we also believe that the stock could continue to struggle in the near future if macro conditions in Europe soften. On the other hand, we believe the company is making significant headway in improving their margins in the European region and pricing in the region is likely to head higher as the Euro continues to be weak versus the US Dollar. Furthermore the company has shown itself as a savvy acquirer and we believe there is potential for the company to grow through acquisitions. Finally, if the company does not grow significantly or lever-up with a significant share buyback, we could see the company taken over. Should the European region improve, should the company make another acquisition like Orange County or should the company be a target for acquisition themselves, there could be significant upside to our estimates.

Risks

There are a number of risks to our €31 target price. First, and foremost, the Eurozone has been undergoing significant upheaval. Should the previous debt crisis in Greece and Spain once again rear its head, Smurfit Kappa's ability to sell products could be severely impacted, causing the stock to fail to reach our target.

In addition to the aforementioned risks, the company owns assets in Venezuela. Venezuela's government has recently taken over assets in other businesses in the name of nationalism, a fate that Smurfit Kappa (thus far) has been able to mostly escape. However, should the company's assets in Venezuela be seized (potentially without any compensation), earnings and profitability will be cut and shares of SKG could struggle. Additionally, the economy in Venezuela is currently experiencing hyper-inflation, and as a result the currency (and thus the asset values) in the region is likely to be devalued.

Finally, Smurfit Kappa is one of the largest consumers of OCC in the world. Prices of OCC have been increasing in volatility over the last few years, and we have seen both significant run-ups in OCC pricing as well as very quick pricing declines. Should OCC prices increase quickly, and should Smurfit Kappa (and other recycled producers) fail to pass on the higher costs to the consumers, profitability for Smurfit Kappa could decline significantly, and shares of SKG would likely fail to meet our target.

[moorsie2] 02/2/2015 16:50

22 appears to be a psychological barrier. Once it breaks and holds then 23 to 23.50 is the logical trading range here

[moorsie2] 26/1/2015 15:30

Amazing this is not on anyone else's radar...

QE in Europe is a boost here as it should trigger greater economic activity and consumer demand.
Euro depreciating is presenting great value for UK and US investors
Tipped by Paper Industry Analysts to be the share of 2015 in the sector

-Very interesting to see, just out at 1pm UK time - Rock Tenn and MWV to merge.
This is interesting from a SKG point of view. Rock Tenn were considered by analysts second favourite to IP in buying MWV. The same industry analysts saw two options for IP. Consolidate with MWV in North America or grow through aquisition overseas. Now that option 1 is off the plans is option 2 now a stronger play...?