Rpc Share Discussion Threads

[cheshire pete] 21/7/2017 11:04

Buy backs are often criticized but, as reported in the press yesterday, they do send out a message to the short sellers to go and look elsewhere.
It seems these days that the market is not used to such rapid growth through acquisitions and I hope that the 'pause for breath' is only as long as necessary and compatible with the 2020 strategy. As a long term holder I have confidence in this company and look forward to its continued growth.

[cashcow5] 21/7/2017 09:56

All RPC's polymers are recyclable already, the issue is usually more to do with the infrastructure (e.g. kerbside collection, national and international recycling systems) than the items themselves that are being produced.

There is currently no means of making 100% of plastic packaging bio-degradable in a viable manner, with or without £100m of investment. Corn based polymers are a possibility but you then get into a trade-off between growing corn for food and growing corn for packaging so it isn't really quite that simple, particularly when there is a food shortage in the third world.

There is already plenty of industry research in this area (including within RPC and it's supply chain). Lots of RPC packaging now contains post-consumer regrind and this will continue to grow over the coming years.

[sogoesit] 21/7/2017 09:17

Good point Dozey; whether they've the imagination for that environmental challenge remains to be seen but I'm not sure.
As you say would make them a game changer.

Broker Note: JP Morgan re-iterated yesterday "Overweight" with Target Price 1250p.

[dozey3] 20/7/2017 19:19

Relieved to see the moratorium on further acquisitions for the time being. Dead against £100m buy back. If they've found that sort of money down the back of a sofa, then IMO they should either give it to its owners as a special divi, or invest it in making 100% of its products bio-degradable or at least recyclable. Now that would be a game changer.

[adejuk] 20/7/2017 15:11

a small 10k dip for me just on the charts.

[billywhizz1] 20/7/2017 11:48

Well reported Shauney2. You've hit the nail on the head.

[mfhmfh] 20/7/2017 10:42

hxxp://www.i i i.co.uk/articles/430478/why-rpcs-now-set-40-gains

[shauney2] 20/7/2017 08:19

From the Times

RPC Group
RPC’s decision to call a halt on further acquisitions, after more than 20 over the past few years, is probably just as well because if, as the company says, its shares are severely undervalued, it does not make a lot of sense to issue new ones at this level to pay for them. Instead, the packaging specialist is embarking on a share buyback programme, albeit a limited one of up to £100 million given its market capitalisation of about £3.5 billion.

This is sending out a clear message to the bears that have savaged the share price since the start of the year. One fund manager, in particular, has questioned the cashflow that is coming in and whether the more recent acquisitions, which include the once-quoted British Polythene Industries and Global Closure Systems, the French bottle top maker, are performing as well as RPC says.

So the trading update that came at the annual meeting said that first-quarter revenues were “well ahead” of last year’s at £960 million (RPC does not normally give a figure for the first quarter), that margins and profits were ahead of management expectations and that cashflow “remains on track”. The shares, one of this column’s recommendations for this year at £10.65, had been as low as 720p last month and have continued their recovery since, adding another 37½p to 880p yesterday . They sell on a forward multiple of less than 13. If management’s reassurances are to be relied on, that feels too low and further recovery in the price can be expected.
MY ADVICE Buy
WHY The fall in the share price still looks overdone

[phillis] 19/7/2017 18:18

Shareholders have told RPC to rein in the aquisition programme and focus on delivery

[sogoesit] 19/7/2017 17:09

Cashcow: Errm, I have confidence, the market hasn't until now perhaps?
All my own views.

[broadwood] 19/7/2017 14:34

First quarter revenues were lifted by organic growth, acquisitions and positive foreign exchange movements
RPC Group PLC (LON:RPC) shares were higher today after the FTSE 250-listed firm signalled a share buyback programme of up to £100mln and said revenues for the first quarter to end June reached around £960mln, buoyed by organic growth, acquisitions and foreign exchange movements.
The plastic packaging firm said in a trading update that it believes its current share price significantly undervalues the company's performance and its future prospects

It added: "Group margins and profitability levels were ahead of management expectations, with the negative time lag impact from passing through higher polymer prices offset by a favourable currency translation effect."
RPC also said its cash flow development remains on track.
The group's chief executive, Pim Vervaat said: "The Board is confident that the Group's performance going forward will continue to deliver value to its shareholders

[cashcow5] 19/7/2017 13:47

speak for yourself Sogoesit.

I have huge confidence in RPC's management, as should the many people who have made lots of money from RPC during the last few years.

[sogoesit] 19/7/2017 12:03

This is the relevant paragraph:
"The scale of the opportunity to consolidate European markets remains significant and participation in this industry consolidation is a core part of RPC's long term strategy. Given the pace of recent acquisition activity, in the near term RPC is focused on delivering the announced synergy realisation programme; demonstrating the contribution of the newly acquired businesses; whilst continuing to drive organic growth, margin improvement, return on capital and strong cash flow generation. Consequently, RPC does not anticipate making any significant acquisitions, or incurring further acquisition-related exceptional costs, for the current financial year over and above those it has already announced."

I'm not sure that I interpret that paragraph as concluding that "consolidation of a fragmented market by acquisition" to obtain economies of scale in a commoditised market is no longer on the agenda nor a good idea.

Maybe just a (short-term) bout of indigestion... giving us all time to find out what the real numbers are?

Of course, if management were more transparent, we might have more confidence in them too.

[nfs] 19/7/2017 10:20

Yes the implication is that no more immediate acquisitions means that acquisitions are not the secret sauce for financially engineered growth, which was a suggestion

[mfhmfh] 19/7/2017 09:24

I think the market likes the fact there are no more acquisitions for this financial year. IMHO.

[phillis] 19/7/2017 09:13

numbers getting much bigger
ROCE is what matters (and cash generation)

[mellorscarthwaite] 19/7/2017 09:01

Just what the doctor ordered

[sogoesit] 19/7/2017 08:40

They don't do themselves a lot of favours by being less than transparent compared to other companies. Although there is an improvement.
This quarter they reported a revenue figure of approximately £960m saying it was "well ahead" of the corresponding period last year. And they give a figure for organic growth.
Last year, on 11 July, the corresponding period, they said they were "significantly higher" and no mention of the number for organic growth.
No wonder, in between, the share price goes up and down like the proverbial knickers!

On a chart basis there is now a massive Head&Shoulders in place... with significant necklines in place to clear and, of course, the head!
Looking a lot better!

[18bt] 19/7/2017 07:21

The commitment not to make further acquisitions in the current FY may also help to settle the nerves. There will still be naysayers, but the statement is reassuring.

[broadwood] 19/7/2017 07:15

More progress.

.
In light of the current valuation and the Board's confidence in the long term prospects of the business, the Board of RPC believes the current share price significantly undervalues the performance to date and the Group's future prospects. Accordingly, RPC intends to commence an inaugural share buyback programme of up to GBP100 million. The programme will be conducted over a period of up to 12 months and will be kept continually under review.

[billywhizz1] 18/7/2017 13:11

Nowt to do with the daily auctions (3)..........This is a red herring !

[phillis] 18/7/2017 10:21

three auctions per day
- one at midday

[sogoesit] 18/7/2017 09:16

Indeed, yesterday's closing auction uncrossing trades (UT) were 793,111 reported at 16:35.21.

(There are two auctions per day - one between 08:00 and 08:05 and one between 16:30 and 16:35 if I'm correct. Sometimes there are auctions during the trading period if/when prices moves outside a certain percentage range). Always be aware of these when trading or instructing your broker. EG it is dangerous to give a "Buy on Open" or "Sell on Close" instruction as likely you will be in the auction period.

(Apologies for comment if you're already aware of this stuff).

[shauney2] 18/7/2017 08:27

An often asked question at the of the day.I'm guessing the 793k was at 16.35 and a UT

Uncrossing Trade. This is used for the single uncrossing trade, detailing the total executed volume and uncrossing price as a result of a SETS auction.