Smurfit Kappa Share Discussion Threads

[lbo] 21/12/2009 11:47

LOL

Cheerleader of spin calls for Irish good news agenda





Has Goldman Sachs, beset with a public image problem, turned global economic cheerleader by way of compensation?

[lbo] 21/12/2009 11:43

The number of companies with primary listings on the Irish Stock Exchange is also falling as companies merge or delist which is bad news for brokers who advise those companies.

Davy Stockbrokers, the house broker for 70pc of listed Irish companies, has just 49 companies on its client list today, according to the firm's weekly book. The company had 55 clients in October 2007.

Davy recently helped CRH with the company's rights issue, the biggest in Irish corporate history and a lucrative deal for all the brokers involved.

Davy's bond desk is also thriving as the economy tanks. As the only Irish primary dealer, Davy is also benefiting from the Government's voracious appetite for cash.

The Government's fifth bond sale took place earlier this week and there are many more in the offing; all with the potential to generate hefty fees for Davy.

[keelingr] 21/12/2009 11:36

As opposed to your own Bloxham based investment system!!! Hilarious!

[lbo] 21/12/2009 11:33

Brokers manipulating markets by stealth, says Financial Regulator



Some Dublin stockbrokers are potentially engaging in market manipulation by seeking to place largescale orders for stocks which are then not implemented, the Financial Regulator has concluded after a long investigation

[keelingr] 21/12/2009 11:27

Clutching at straws my friend!! You should keep your doom-mongering focussed on the banks where there is legitimate cause!

[lbo] 21/12/2009 11:24

Ireland Inc's corporate governance isn't good enough

[keelingr] 21/12/2009 11:24

I've backed up my argument with analysis from Golman Sachs, Davy, Goodbody, Dolmen, Merrion, the internationl Bond Market and the share price itself. You on the other hand are relying on some shoddy articles from the Irish Indenpendent.

[lbo] 21/12/2009 11:23

Mr McGann remains chief executive of packaging company Smurfit Kappa, a business whose debt stands at some €3.18 billion and which depends on the confidence of international markets.

The company's self-image is as a beacon of Irish business, a player of rank in the onward march of global commerce. Smurfit Kappa's share price, by the way, is down 83.88 per cent in 12 months. This does not result from its connections to Anglo, but it illustrates the extent to which it is under pressure to convince investors about the prospects for the business.

Prior to his departure from Anglo, Seán FitzPatrick chaired the Smurfit Kappa board. Because his position had become untenable, Mr FitzPatrick left Smurfit Kappa and a number of other boards when the concealment of his director's loans at Anglo was uncovered. Is Mr McGann's role in Smurfit Kappa any more tenable following Anglo's collapse into the bosom of the State?

[keelingr] 21/12/2009 11:20

LBO - you keep quoting the same rubbish from the Irish Independent as if it carries any weight! It's laughable! Why don't you find me some decent analysis from any reputable house on SKG which backs up your doom theory??!!

[lbo] 21/12/2009 11:15

LOL

Goldman sachs!....Ask them about TARP and AIG and then look into who is involved in selling all the Irish bonds?

Its ironic you talk up independent news on that thread and then say then rubbish the paper when it reports on the Smurfit debt burden.



QUID PRO QUO



After more than seven years as Smurfit boss McGann's record is a mixed one.

While no one doubts his commitment to the job the company's performance has been weighed down by its extremely high level of debt, something which will tarnish his legacy when he retires, most likely when he reaches 60 next year.

[keelingr] 21/12/2009 10:37

Should we believe a) the global investor's favourite journal "The Irish Independent" as quoted by LBO, the Merchant of Doom or b) Goldman Sachs!!!

December 3rd 2009


Goldman Sachs raises Smurfit Kappa price target to 8.80 EUR from 6.93

[keelingr] 21/12/2009 10:24

The gospel according to the world renowed financial journal aka The Irish Independent!!!! I would rather listen to LBO Doom FM!

[lbo] 21/12/2009 10:21

Unfortunately for Smurfit Kappa until the pace of economic activity begins to pick up and leads to an increase in the demand for its boxes and cartons, reduced costs, higher prices and lower capacity amount to little more than running faster in order to stand still.

There is also the risk that any recovery will result in at least some producers adding new capacity, something that has always happened in the past. This would restart the boom-bust cycle to which the paper and entire packaging industry appears to be incurably addicted.

[lbo] 21/12/2009 10:19

Burdened with debt



Originally floated at €16.50 the share briefly hit €21 in May of that year before falling to less than €2 earlier this year.

As a paper and packaging company Smurfit Kappa is extremely exposed to the economic cycle. When activity slows down there is suddenly far less demand for its cardboard boxes and cartons.

This is what happened to Smurfit Kappa. In 2008 its sales fell by 3 per cent to just over €7bn. However due its extremely high level of fixed costs, its operating (pre-interest) profits halved to just €282m.

Smurfit Kappa's problems were compounded by its debt mountain, which stood at almost €3.2bn at the end of 2008.

With interest costs devouring all of its operating profits and then some Smurfit Kappa ended up losing €32m before tax last year.

[keelingr] 21/12/2009 10:15

But results keep proving that the fundamentals are sounds LBO - Q3 '09 EBITDA of EUR192mln during the deepest recession in living memory - and EUR600m cash on the balance sheet with talk of acquisitions having recently issued EUR1bn of 8-10 year money - does this sounds like a company on its way out???!! What part of EBITDA of 800m-1bn per annum do you not understand?

[lbo] 21/12/2009 10:07

The dash for trash during QE does not mean the fundamentals are sound! Those yields are saying the bonds are more or less junk and the balance sheet worries are not gone away.






Sales of dollar junk bonds hit record



Nevertheless, some analysts question whether the rally is sustainable.

"The government backing of the banking sector helped open the new issue market and was a watershed moment for high yield," said Steve Huber at T. Rowe Price.

"[However] companies are not out of the woods yet – the day of reckoning has just been extended."

[keelingr] 21/12/2009 09:59

LBO - the key here is the bonds - SKG have managed to get 8-10 year money for between 7.25-7.75%. That says it all about their supposed balance sheet worries. You've no problem quoting davy advice when it's in your favour!!!

[lbo] 21/12/2009 09:51

Have a look in the conflicts of interest disclosure on the note and who Davy act as Broker to is my advice

Davy found to have breached ISE rules on bond sales

[keelingr] 21/12/2009 09:35

Price 650c Rating: Outperform Issued: 30/06/09

Latin American price increases positive for SKG

Kalbin, one of the largest containerboard producers in Latin America and based in Brazil, has announced plans to increase containerboard prices by $50/tonne from January 1st across the region.
We expect that SKG's Latin American operations will account for circa 25% of
group profits in 2009. Any improvement in market conditions in this region will
have a positive impact on the 2010 out-turn. The stock is up 10% over the past month, outperforming its main peers as well as the overall European sector which is down 8.7%. Improving market conditions,(pricing) combined with a growing realisation that the company's balance sheet is no longer an issue, are the key drivers of outperformance in our opinion.


At 650c, it continues to look good value, and we reiterate our 1000c price target.

[keelingr] 17/12/2009 07:58

Always signing the same tune LBO - EBITDA of EUR800-1000 per annum - the debt is not a problem as you can see from the share price appreciation and the keenly priced bonds!!!

[lbo] 17/12/2009 00:20

Pity about the net debt still being over €3bn! And they do indeed earnings boosts to be able to pay back the bondholders!



"(EBITDA) tumbled 12pc last year from a record €1.06bn in 2007. Analysts see the group's earnings bottoming out at about €725m for this year

Last month, Smurfit issued €1bn of eight-year and 10-year bonds, using the proceeds to redeem some of the €2.3bn of bank debt it had maturing between 2013 and 2014. Mr Curley said a lot of highly-leveraged companies would be competing in the debt markets in three to four years' time to refinance large debt mountains"

[keelingr] 16/12/2009 09:46

"...the group, which has €600m of cash on its balance sheet and access to an additional €500m of credit, continues to scout for deals "at the right price", with eastern Europe and Latin America the main target areas."