Rpc Share Discussion Threads

[fez77] 08/6/2018 09:58

yes - but we like to be self-righteous.

[bouleversee] 08/6/2018 09:49

So all our efforts will achieve precious little.

[fez77] 07/6/2018 22:33

For "sitting tight" read "holding".

[fez77] 07/6/2018 22:32

Problem with Motley Fool is that one analyst says one thing and another analyst says the complete opposite. See my post at 1788 and contrast it with post at 1866. Its all a bit pointless when trying to come to an investment decision!
I'm sitting tight until the dust settles. Also Jamie Pike (or his wife)- Chairman of the Board - bought 14,570 at £6.86 and now holds 359,830. That shows some confidence.

[ali47fish] 07/6/2018 16:42

too many if and buts - is this good to hold?

[peterpiperpickled] 07/6/2018 12:46

A great deal more than you think

[phillis] 07/6/2018 10:51

what do Fools know anyway?

[bouleversee] 07/6/2018 10:34

An article in the FT suggests that the big drop yesterday was linked to disappointment with the free cash flow number.

[asturius101] 07/6/2018 09:30

yawn....thanks for sharing

[skinny] 07/6/2018 09:22

My position got closed in the melee at the opening for +35 points - good luck to holders.

[sogoesit] 07/6/2018 05:49

Kipling.

Apart from which when do we all pile in?
When the yield gets to 5% or 6% alongside some of those oil&gas companies?
I mean, where is “good value” here? Are there any direct competitors to base a judgement against?
What’s the benchmark? (I know when to buy or sell Shell for example but here I’m totally lost).

[fez77] 06/6/2018 21:28

IF you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;

[jeffian] 06/6/2018 19:33

"business trading on circa 23 times [current year] earnings on our estimates, an undeserved 50 per cent premium to the market.”

So at 866.5p they must have been using the 'basic' statutory 2017 eps of 37p-odd ('adjusted' figure was 62.2p). Statutory 2018 eps is 61.6p (or 72p 'adjusted') which at current share price of 685p = PER of 11.1x (or 9.5x 'adjusted'). So by NT's own metrics, doesn't that put them at a discount to the market now?!

[jonwig] 06/6/2018 19:07

This is the original FT article of March 22 2017, mentioned in #1849, when the share price was 866.5p:

RPC hit a six-month low on Wednesday after Northern Trust analysts accused the packaging maker of disguising structural problems with a lot of acquisitions.

The group last week completed the $640m purchase of Letica, a Michigan-based peer, which was its tenth deal in 12 months. According to Northern Trust analyst Paul Moran, RPC management has been encouraged to pursue value-destructive acquisitions by “innovative221; bonus schemes and “some of the most aggressive accounting we have seen”.

He argued that RPC’s definitions of adjusted profit and free cash flow had been inconsistent over the past five years, and had flattered the figures in ways that sometimes “defy accounting logic”. And by stepping up the pace of acquisitions over the 12 months, RPC had masked its structurally weak pricing power and labour cost inflation, Northern Trust told clients.

“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,” the broker said. “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 circa 23 times [current year] earnings on our estimates, an undeserved 50 per cent premium to the market.”
Recent comments here, "Gearing too high", "Rubbish", etc. just go to show that accounting is an art not a science. And the comment that major shareholders would have warned the company, etc., etc. begs the question of what they were asking Carillion's board.

[jeffian] 06/6/2018 17:50

I'm with Hargreaves Lansdowne and this is what they have to say about it, FWIW.

"Our View
Plastic packaging manufacturer RPC has been under pressure to prove its long-running acquisition programme is creating value for shareholders, and not masking a lacklustre operating performance. Management have put a hold on acquisitions while it deals with those concerns.
So far, we think the results are good. Organic growth is healthy and exceptional integration costs, the focus of much of the investor discontent, are falling. From an operations perspective the company looks healthy, and the group looks set to maintain its 25-year track record of dividend growth.
Unfortunately the share price hasn't reflected the improvement. That's partly because RPC is facing new pressures. This time from regulation.
Following the airing of 'Blue Planet', the UK government has faced calls to tighten up rules on plastic waste. The EU has followed suit, and is already tightening controls.
RPC argues that it's well placed to weather the political turbulence, and could even benefit.
The group is Europe's leading recycler of polyethylene film and the majority of its products are recyclable. Its focus on innovation should mean it can respond quickly to demand for more easily recyclable products. It says its innovation centres are actively researching renewable polymers and compostable materials that break down completely when treated correctly at the end of their life.
We think RPC's scale and focus on innovation are significant advantages. However, it's unlikely the group would escape a crackdown on plastic completely unscathed.
Nonetheless we remain upbeat about RPC's prospects. Plastics are a key weapon in fighting that other environmental bogeyman, carbon emissions, and RPC is well-placed to benefit from the consolidation the sector as well as increased demand.
Prior to full year results the shares offered a prospective yield of 4%, and traded on 10 times expected earnings, well below their longer-term average. But with the public mood firmly against plastics at the moment, investors will need a change in sentiment before the shares recover. How long that will take is anyone's guess."

[asturius101] 06/6/2018 17:45

#1857 - absolute codswallop

[riverman77] 06/6/2018 17:31

It seems that it is the modest fall in free cash flow which has triggered the latest sell off, rather than the EU clampdown on plastic which was already known about and won't really affect RPC. My view is that the market is giving far too much credence to the NT analyst, who probably has his own agenda, with many investors fearing he might be on to something and staying clear. So a bit of a vicious circle which means this is probably going to stay under pressure for a while but on a long-term view looks great value on just over 9 times earnings.

[phillis] 06/6/2018 17:22

Gearing too high?
Why so?
It is not affecting how the business is run, the purchase of desirable other businesses and the interest cover is more than adequate

If your point had any validity at all, major shareholders would be telling the Company to cease its buy backs and pay the bank debt down

Rubbish comment

[makinbuks] 06/6/2018 16:40

I'm surprised at the reaction today but if the message wasn't clear before, it certainly is now. Gearing at 60% is too high. FCF needs to grow in line with profit. Vague statements about investing in working capital for the growth cycle won't wash. Absolute level of borrowing needs to fall. To that end they should abandon further share buybacks and look to grow the dividend only very modestly over the next three years. If they achieved that and perhaps halved the absolute level of borrowing whilst still growing profits by £50m the shares would re-rate

[skinny] 06/6/2018 16:28

Not quite a Director but near enough :-)

"Person closely associated with director, Jamie Pike".

[bouleversee] 06/6/2018 16:26

Claire Pike, Director, has bought 14,750 shares @ 686.36 today. Every little helps.

[hatfullofsky] 06/6/2018 16:02

Alliance News have an article stating the draft EU plastic directive also includes "The EU's proposals would also oblige producers to help cover the costs of cleaning up items such as crisp packets, cigarette butts, drink containers, wet wipes and lightweight plastic bags." We all know the EU legislators are bonkers so who knows where they will end up, fortunately it may take some time to get there.

I can't see the producer holding the baby here, surely it should be the retailer.

Helal Miah, investment research analyst at the Share Centre: "The biggest fear is on tougher European legislation which seems likely, no doubt, it will have an impact on sales and earnings and make the task of delivering organic growth ahead of GDP a little more difficult."