Share Name Share Symbol Market Type Share ISIN Share Description
Smurfit Kap. LSE:SKG London Ordinary Share IE00B1RR8406 ORD EUR0.001
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -9.00p -0.51% 1,760.00p 1,762.00p 1,765.00p 1,775.00p 1,753.00p 1,775.00p 265,940.00 16:35:25
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Industrials 5,970.0 441.0 127.1 12.1 4,159.69

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Date Time Title Posts
02/12/201610:41SmurfitKappa Group charts and news444.00
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20/2/200100:18SKILLSGROUP 132 / 133 , 4.5 MILLION TRADED YESTERDAY3.00
24/1/200121:30Skillsgroup Inverted head and shoulders1.00

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Smurfit Kap. Daily Update: Smurfit Kap. is listed in the General Industrials sector of the London Stock Exchange with ticker SKG. The last closing price for Smurfit Kap. was 1,769p.
Smurfit Kap. has a 4 week average price of 1,780.85p and a 12 week average price of 1,795.47p.
The 1 year high share price is 2,019p while the 1 year low share price is currently 18.24p.
There are currently 236,346,118 shares in issue and the average daily traded volume is 456,447 shares. The market capitalisation of Smurfit Kap. is £4,159,691,676.80.
ppreston1: Not exactly the share price reaction I would have expected following the announcement of the promotion to the FTSE100. What's going on here?
moorsie2: Containerboard price increases announced yesterday - hence the run on the share price Will break through 19 no problem over the next week
moorsie2: Main Broker (Davy) note out this morning 24 Euro target DAVY VIEW Strong cash generation remains one of the key reasons to invest in Smurfit Kappa Group (SKG). With debt levels now at more manageable levels, shareholders are likely to benefit directly from this cash in the form of growing dividends or value-enhancing investments in capex or M&A. In the absence of deals, management will return capital to shareholders. We are increasing our price target to 2400c to reflect the potential benefits of this new capital allocation strategy. Capital allocation strategy could add over 300c to the share price over time Strong cash generation has been one of the main reasons to invest in SKG. Over the past five years, however, investors have had to rely on the pay-down of debt – and the consequent accretion to equity – in order to benefit from this cash. With debt levels now reduced to manageable levels, management has outlined a new capital allocation strategy that will allow shareholders to benefit in a more direct way. The first element of the new strategy is a progressive dividend policy. The final dividend for 2013 was increased by 50% and management has promised to pursue a progressive dividend policy, i.e. to grow the dividend with earnings. The company will also invest an additional €50m per annum in capex over the next three years. This will yield incremental EBITDA of €75m after the third year. We estimate that this could add 90c to the share price. Post dividends and capex, we estimate that SKG will generate almost €860m in cash flow over the next three years. This, combined with excess cash balances, could facilitate M&A activity or a share buyback programme in excess of €1bn. We estimate that M&A activity could add 250c to the current share price while a buyback programme could add 370c per share. Upside risks to forecasts Although we are leaving our full year 2014 and 2015 forecasts unchanged, we believe the risk is to the upside depending on movements in corrugated and OCC prices in Europe. Stock looks cheap; upgrading price target to 2400c With numbers unchanged and with the stock continuing to trade at a 20% discount to peers, the core value of the business remains 2100c. We believe that the new capital allocation strategy will add a minimum of 300c per share to the equity value of the business. We are increasing our price target to 2400c, 22% above current levels.
moorsie2: Re-financing set to save €13m in interest costs, with more to go; equity continues to look cheap DAVY VIEW SKG's latest re-financing will potentially add over 7% to group earnings. It also completes the transition of the company from leveraged to corporate credit. The bond market has consistently recognised the attractiveness of SKG's cash generating model. At a P/E of sub-10 times, versus the sector on closer to 12 times, the equity market does not appear to recognise this value. Applying a peer average P/E of 11.5 times implies a share price of almost 1700c, well ahead of our current 1500c price target. Re-financing set to save €13m in annual interest costs as company moves to corporate credit Smurfit Kappa Group (SKG) announced that it has completed a further re-financing of its balance sheet which results in its transitioning from leveraged to corporate credit. Under the latest arrangement, SKG has negotiated a new five-year facility of €1,375m all of which is unsecured. €750m of the funding is to replace all of the remaining senior secured credit while €625m replaces the existing €525m revolving credit facility (RCF). As a result of the new senior credit facility, all of the recent secured bond issues also become unsecured. There is a significant interest cost savings under the new funding arrangement with the senior credit being priced at a spread of 225bps over EURIBOR and the RCF at 200bps over. This compares with the previous cost of 375bps and 325bps respectively. Management expects that the cumulative saving will be of the order of €13m on an annualised basis. AR securitisation provides additional flexibility; calling the 2017 bonds could save an additional €20m in interest costs In addition, the company has agreed a new five-year accounts receivable (AR) securitisation programme of up to €175m at a margin of 170bps. This is in addition to the existing €250m securitisation programme. In the statement, management indicates that the new funding structure provides the company with "greater financial flexibility ... including the potential to refinance part of its more expensive bond debt at the appropriate time". This could refer to the €500m of 7.25% 2017 bonds which become callable in November this year. Assuming this bond issue is re-financed using the €175m from the AR securitisation programme, €125m of the RCF (management has in past indicated that a facility of €500m is sufficient) with the balance from a new bond issue at circa 4.5%, could result in an annual interest cost saving of over €20m. Combined therefore, the latest re-financing programme could result in an annual interest cost saving of €30-35m, or over 10c EPS on our current 2013 forecast of 137c. Equity continues to look cheap; applying peer average P/E implies a share price of almost 1700c We are currently forecasting an adjusted EPS for 2013 of 137c. An annualised interest saving of €33m adds another 10c to this figure, implying a pro-forma EPS of 147c and a P/E of 9.6 times. This compares with a P/E of 9.8 times for Mondi Group, 11 times for DS Smith and 14.3 times for the European sector. Applying a peer average P/E of 11.5 times to the pro-forma EPS of 147c implies a share price of 1690c, well ahead of our current price target of 1500c. Adding €33m to our current circa €300m FCF forecast (pre-dividends) for 2013 implies a free cash-flow yield of over 10% which again looks very good value for a corporate credit. EBITDA interest cover would go from a healthy 5.4 times to 6.4 times. --------------------------------------------------------------------------------
lbo: Paper and packaging group Smurfit Kappa was floated on the Stock Exchange five years ago this month at a price of €16.50 per share before briefly touching €21 in May of that year. However, the share price quickly went into reverse falling as low €1.09 in October 2008. While the Smurfit Kappa share price has since recovered to €7.28 many of chief executive Gary McGann's share options remain out-of-the-money. However, he retains in-the-money share options worth approximately €800,000 as well as owning 326,000 shares with a value of €3.27m
lbo: less favourable news in the US paper and packaging industry, where the latest round of containerboard price increases is failing to stick according to a new report. The report was the catalyst for pressure on the share price of Smurfit Kappa. Its share price finished down 5.25 per cent at €7.40.
lbo: What would you do? Get the share price up then try and get a discounted share issue away to reduce the debt that has really only been restructed on a short term basis. I wonder were the bondholders even given an indication that this would happen thus they were happy to refinance a while back. And all the while the real threat of a poor consumer recovery could easily put Smurfit Kappa back under pressure as they run out of costs to cut. A rights issue now is highly likely going on the evidence IMHO
keelingr: Let's have a bit of international opinion then. How about Deutsche Bank? Deutsche Bank upbeat on European packaging sector Jan 20, 2010 (M2 EQUITYBITES via COMTEX) -- Company: Deutsche Bank AG (DB) 20 January 2010 - Deutsche Bank prefers packaging companies, especially those with exposure to corrugated cardboard, to paper makers, according to an analysis of the European paper and packaging sector, published on Tuesday. The broker's top pick in the sector is Irish Smurfit Kappa (ISE: SKG) due to the company's exposure to corrugated cardboard. Deutsche Bank also maintained its "buy" rating on Swedish Svenska Cellulosa AB (STO: SCA B), or SCA, with a share price target of SEK115. However, Finnish UPM-Kymmene (HEL: UPM1V), M-real (HEL: MRLAV) and Stora Enso (HEL: STERV), as well as Swedish Holmen (STO: HOLM B) and Norwegian Norske Skog (OSL: NSG) got their "sell" ratings reaffirmed. "Only considerable capacity curtailments and consolidation in the sector can change our view on paper makers but this is not very likely to happen," Deutsche Bank said. The financial results of packaging companies are expected to recover in 2010, while the development of paper makers will be hampered by overcapacity, price pressure and structural decline in paper demand. The prices of testliner and kraftliner are expected to grow by 15% and 10%, respectively, and demand is seen to increase by 4% in 2010. At the same time, Deutsche Bank forecast that newsprint prices in Europe will fall by 15% this year, versus the previous estimate for an annual decline of 10%. Today, the B-series shares in SCA and Holmen opened at SEK103.10 and SEK179.50, respectively, on the OMX Nordic Exchange in Stockholm. In Helsinki, the stock in UPM opened at EUR8.17, the R-series share in Stora Enso opened at EUR4.60, and the A-series share in M-real -- at EUR2.22. Norske Skog's share opened at NOK9.18 on the Oslo Stock Exchange.
keelingr: Smurfit Kappa (Buy, Closing Price €6.30) Analyst: Robert Eason Raising forecasts ahead of Q4 results Smurfit Kappa Ahead of Q4 results on February 10th we are upgrading our EBITDA forecasts for Smurfit Kappa by 2% in FY10 and 14% in FY11. These reflect an improving demand environment, confidence that the current round of price increases for recycled grades in Europe will be successful (underpinned by higher OCC prices and an industry where a significant proportion is still finding it difficult to generate cashflows) and a tight supply situation in the US, which will impact kraftliner export prices and therefore underpins prices in both Europe and Latin America. The forecasts also now incorporate the devaluation of the Venezuela Bolivar. The revised forecasts have EBITDA peaking at €1.2bn, versus previous peak of €1.1bn, so we are still not giving full credit to the cost take out programmes. From a valuation perspective we believe the share price should at the very least trade at NAV (760c), given the positive forecast revision cycle, which will see the company generate double-digit returns by FY11, and increasing flexibility emerging on the balance sheet that will raise the speculation over acquisitions and dividends as we go through the year. However, applying mid-cycle multiples (EV/EBITDA 6x) to our conservative mid-cycle EBITDA forecast yields a PT of €10. As this represents significant upside, we reiterate our Buy recommendation ahead of the Q4 results. Watch out for SCA's (No.2 European corrugated producer) Q4 results this morning. LBO --> "increasing flexibility emerging on the balance sheet that will raise the speculation over acquisitions and dividends as we go through the year."
keelingr: From Merrion-Capital Smurfit Kappa (Buy @ €6.20) Improved mid-cycle EBITDA potential – Upgrading to Buy Thu, 12 Nov 2009 SKG's mid-cycle earnings capacity is greater than we previously estimated. While the erosion of supply discipline is a key risk, we now believe SKG can reach mid-cycle EBITDA earlier than we had anticipated due to the impressive pace of recent supply-driven price increases. Consequently, an EV valuation of 6x mid-cycle EBITDA is now appropriate, equivalent to €8.25 per share. We upgrade to BUY. Better than expected trough EBITDA increases earnings capacity to a recovery in prices As a result of SKG's better than expected Q3 results its trough earnings run rate will be greater than we previously estimated. Despite sequentially weaker corrugated box prices and firmer recycled fibre costs, Q3 EBITDA rose to €192m from €184m in Q2 rather than decline as forecasted, as cost savings and a strong performance in the Latin American operations provided a greater than anticipated offset. Significant EBITDA forecast upgrades We are upgrading our 2009 EBITDA forecasts to €730m (from €674m) to reflect the €32m positive variance in Q3 and an increase in our Q4 forecast to €175m. For 2010, we are revising our EBITDA forecast to €830m from €680m. With demand having now stabilised, our upgrade assumes that the Q4 €50 per tonne containerboard price increase will be successfully passed through to corrugated box prices, giving a €70m uplift. This is in addition to the €80m positive impact from the higher than expected trough quarterly EBITDA run-rate. The timing of a demand-led containerboard price increase is uncertain. Our forecasts assume a €50 per tonne increase (feeding into a c.5% box price increase) at end 2010, allowing a further increase in EBITDA in 2011 to €940m, partly offset by higher input costs. Supply discipline is a key risk, resulting in a degree of uncertainty in forecasts beyond H1 2010. Our revised EBITDA forecasts underpin free cash flow estimates of c.€250m in both 2010 and 2011. EV valuation of 6.0x mid-cycle EBITDA now appropriate – Upgrading to BUY Our estimate of SKG's mid-cycle EBITDA capacity has increased to €900m from €850m. Furthermore, industry supply actions have resulted in the implementation of price increases quicker than we anticipated. This will allow SKG attain mid-cycle earnings earlier than we previously expected - within the next two years, or possibly sooner depending on the timing of a demand pick up. In this context, it is our view that an EV valuation rating of 6.0x is now appropriate, equivalent to a share price of €8.25. In addition, the conversion of debt paydown into equity value has the potential to add c.€1 per share p.a. We upgrade our recommendation from Hold to BUY.
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