Smith (ds) Share Discussion Threads

[moorsie2] 11/3/2021 12:10

LONDON, 11 March 2021 (Press Release) - Following our price increase for brown RCCM grades in February, raw material costs have continued to increase at an unprecedented rate across Europe, driven by Covid-19 related lockdowns. Due to the significant increase in our input costs and the continued strong demand for RCCM products, DS Smith Paper is announcing a further price increase of €50 per ton for all RCCM grades for all new orders placed from the date of this announcement. This announcement applies across Europe.

Hot on the heels of this one

LONDON, 18 February 2021 (Press Release) - Due to increased input costs and continuing strong demand, DS Smith Paper is announcing a price increase of €50/T for its brown RCCM grades for all new orders placed from the date of this announcement. This announcement applies across Europe.


100 euros a tonne in 6 weeks is quite unprecedented..

[moorsie2] 03/3/2021 16:21

Haha good man

I looked and see you do not post on any other company and just joined last summer.

Also the only new facts in the public domain is this mornings statement which contains no facts. So what facts are you referring to?

[fairtrader66] 03/3/2021 13:58

Hi Moorsie,

My points are backed up by facts in the public domain.

I use more indicators than just ROCE (which is obviously still important). I suppose we will have to wait to see the full impact of the significant re-engineering which occurred JUST BEFORE covid hit.

I'm going back to focussing on my other undervalued stocks now and will check in around 12 months from now.

Don't sell the best silver whilst I'm gone!

[moorsie2] 03/3/2021 07:56

Cw2000 I completely agree.

A statement that says nothing. I am disappointed that earnings guidance is not lifted higher. This is a once in 20 years sweet spot for the industry.

But then their 'really clever strategy of not being fully vertically integrated and remaining deliberately short on paper is biting them on the bum badly.

I hope the new Chairman is watching closely and listening to the broad spectrum of analysts and industry knowledgeable people outside his company...

[moorsie2] 02/3/2021 20:17

Ianood - I really hope meaniful engagement is taking place for the reasons outline above..

[moorsie2] 02/3/2021 20:15

Fairtrader66

Your two summary points are not backed up by fact in the public domain

1. What have they done that makes them the innovative sustainable guys versus the competition? I cannot see anything of significance
2. You say the share price can only go up , that is demonstrably not true. If they show their roce is significantly behind the competition then our valuation falls

I hold this share and want the best return possible. My point is I cannot see how present management is going to deliver that value and thus look to m&a synergy and market scale. You have stated that management is excellent in your posts. This is the seminal point I challenge. They are not exceptional, they have made poor investment calls that had diminished roce and ifthe ceo is there by June then my holdings are being sold

[ianood] 02/3/2021 19:48

Meanwhile back at the ranch, deep and meaningful discussions are presumably still ongoing with Mondi and maybe we may just get to hear a bit more on that front tomorrow too?

[fairtrader66] 02/3/2021 19:26

I'll be honest, I did the numbers over a year ago and the reason I keep harping on is because I think that relative to future PE ratios, DS Smith has the furthest to go in share price appreciation. This is indicated by the "we shouldn't sell at less than 500". I'm not going to dig out the numbers again because I honestly don't care enough.

The US acquisition has already been run through the balance sheet valuation by the auditors and the market cap to balance sheet ratio's still look fine to me with a proviso that I only expect capital return ratio's to prove themselves 12 months AFTER covid.
I have given no less detail than anyone else on this message board but with regards to sustainable innovation, I think you could begin with viewing the following:

hxxps://www.mondigroup.com/en/products-and-solutions/

hxxps://www.dssmith.com/products-services/packaging-solutions

Mondi says "plastic when useful" and DS Smith doesn't. DS Smith only recycles plastics whilst Mondi "tries" to use recycled plastics.

Your criticisms and opinions well taken but what I'm saying is that DS Smith is a win-win situation and a buy-out would be a pity because 1) they're the innovative sustainable guys and 2) this share price only has an upside still

Criticisms/Disagreements welcome.

[moorsie2] 02/3/2021 19:23

Fair summary nightspot

[nightspot] 02/3/2021 15:56

Q3 results tomorrow.

Indications of present trading and future projections will be more relevant than the results for this covid impacted quarter which are likely to be affected by higher input costs.

[moorsie2] 01/3/2021 10:01

Hi Fairtrader66 - it is never personal, apologies if you felt it was.

My point is you can have an opinion but if you want to pass it off as fact then be prepared to be challenged on such statements.

I cannot see how this business has "re-engineered it footprint, supply chain and sustainable packaging offerings" more than any other player in the European and or USA market. If you have details I would love to see them as I am missing such data.

If not then it is only an opinion not backed up by facts.

Thanks

[dssmith51] 01/3/2021 08:02

I have been a holder of SMDS for over 20 years, having invested through a single ISA at an average price of 140p. I hold 26k shares which is an awful lot of money to me. I’d be happy with 475p but would prefer over 500p. I hope and pray for a bidding war.lol

[marksp2011] 01/3/2021 07:32

"re-engineered it's footprint"

That reads like something from a powerpoint slide. It sounds impressive but means nothing.

I am a holder here only 4k but if I had been offered 475 I would have taken it with both hands. I have found SMDS to be a very disappointing investment and I am not impressed by the management versus those managing the competition

[moorsie2] 27/2/2021 16:42

Fairtrader66 - you really are a cheerleader for the management.

Tell me how and what they have transformed.

Tell me why Interstate and European were value enhancing acquisitions

Tell me what is the strategy as an independent entity and not folding in with either Mondi or a US mega player...

I know this industry and I cannot see a strategy

[fairtrader66] 26/2/2021 13:17

SMDS has re-engineered it's footprint, supply chain and sustainable packaging offerings. It would be sad to see this innovation subsumed by the.. old.

[ygor705] 26/2/2021 12:47

Have commented on the poor management here several times before. To my mind the job of a Board of a commercial organisation is to make money for its shareholders. That involves the management of its share price, a skill that has been sadly lacking here. One might be more forgiving if SMDS was a charity but it is not (although one might be forgiven for thinking that it is being run like one on occasions). Any potential acquirer has plenty of scope to sharpen operations here. I'm with Moorsie - offer me £5.35 and I'm gone.

[muzmanoz] 26/2/2021 10:02

Article in today's Times about a potential acquisition by Mondi. No new details but all good to increase interest.

[fairtrader66] 26/2/2021 07:37

I bought them in the covid dip because they were vastly undervalued at that point. They are still undervalued and still a good buy (even if I sold a little at 420 yesterday).

If others bought them at a higher price then I understand your different perspective to me. From my perspective they are a decent catch-up buy: they have/had good cash reserves, good cash generating abilities, a good chance of returning to pre-covid earnings, the whole buy the Amazon stream

AND

they have innovated and re-engineered just before covid hit. That re-alignment including the US acquisition is going to leap-frog their potential as soon as they can capitalise on it outside of covid times which they are managing well now

They have already made massive changes which will show in the medium term and no-one is giving them the credit for it

I hear you telling me that their peers are boring, staid and that the share price reflects that. I agree. SMDS is the more innovative option.

[marksp2011] 26/2/2021 06:32

DS Smith management are not legends. Look at the share price of this in an industry that has been a major beneficiary of the shift to online.

[moorsie2] 25/2/2021 20:15

They overpaid for Interstate and left a overhang on the share price as they paid for it in shares.

Disastrous decision not a masterstroke ffs

[fairtrader66] 25/2/2021 18:56

That's EXACTLY why DS Smith management are legends:

QUOTE:
In terms of additional benefits, the acquisition of DS Smith would allow Mondi to enter the US containerboard and corrugated packaging market, which has a high degree of consolidation and attractive margins


DS SMITH management made that happen. I still want to see post covid numbers on that. A cheaper USD allowing for american production..

[moorsie2] 25/2/2021 18:21

BRUSSELS, 25 February 2021 (Viewpoint) - By Gleb Sinavskis, Economist, European Paper Packaging, Fastmarkets RISI

Late yesterday evening Bloomberg dropped a news bomb in the paper packaging world about the potential takeover of DS Smith by Mondi. While both companies decline to make a statement, and Mondi's CEO refused to comment on "market rumors" during the annual results presentation, let's look at what this could theoretically mean for the market, if it is true.

There are a number of areas where DS Smith and Mondi will complement each other very well. Mondi has containerboard mills and corrugated plants primarily in Emerging Europe, Turkey and Russia. DS Smith has a strong corrugated plant network and containerboard mill system in Western Europe, but also has assets in Eastern Europe, some that compete with Mondi (e.g., in Poland and Czech Republic) as well as others in areas where Mondi has no corrugated plants or containerboard mills (e.g., the Balkans, Romania and Greece). Meanwhile, both companies have downstream converting in Western Europe (in Germany and Austria). So, from a geographical perspective, combining DS Smith's mill and corrugated plant network across all of Europe with Mondi's cost-efficient containerboard mills and leadership positions in Emerging Europe makes a lot of sense.

What would this mean for the overall European containerboard and corrugated market? We would have a new market leader in containerboard mill capacity as well as in overall corrugated plant production when talking about Europe as a whole (i.e., including Russia and Turkey).

In containerboard, the new company would have just under 7 million tonnes of containerboard capacity in Europe versus the 5.1 million tonnes owned by the current leader, Smurfit Kappa (SKG). This means the combined company will have about 15-16% of total European capacity versus SKG's 11-12%, depending on how you count the current ramp-ups of new machines in the market. More than just overall volume, it is important to note that while SKG has 1.6 million tonnes of virgin containerboard capacity in Europe, DS Smith has only one mill in Portugal (Viana do Castelo) with less than 500,000 tonnes of capacity (not counting US capacity). So, there is a clear complementary value of putting together Mondi's predominantly virgin-based or mixed furnish capacity with DS Smith's predominantly recycled-based containerboard system.

In terms of corrugated volumes, Smurfit Kappa reportedly produced about 9 billion m2 (4.6 million tonnes) of corrugated packaging in Europe in 2019. SKG's European box volumes expanded by 2% in 2020. DS Smith reported a total of 8.6 billion m2 of corrugated board sales in FY 2019/2020, including North America, which for simplicity's sake we will estimate as 10% of these volumes. Mondi had approximately 1.7 billion m2 in 2019 and staggering growth of 7% in 2020, and its recent acquisition of Olmuksan will add about 345 million m2 of additional corrugated capacity. So, totaling these figures, the combined company would become the new leader in overall Europe when it comes to corrugated packaging volume with roughly 9.8 billion m2 versus SKG's roughly 9.2 billion m2. Even assuming some divestments, in Poland, for example, it is likely that the new entity would still have more production than SKG in Europe as a whole.

In terms of additional benefits, the acquisition of DS Smith would allow Mondi to enter the US containerboard and corrugated packaging market, which has a high degree of consolidation and attractive margins. Finally, increasing its size in containerboard and corrugated packaging would allow Mondi to increase the share of this business segment, which is expected to expand rapidly in the future, and decrease the share of the structurally declining graphic paper business.

In the past, Mondi has focused on Emerging Europe, expecting higher future growth in the east compared to the west—which has clearly been the case as the last year shows. However, we expect that corrugated demand growth will be good across all of Europe in the foreseeable future as the rise in e-commerce and a focus on sustainable packaging will add extra growth also in the west on the top of the historical structural factors.

It remains to be seen what will actually happen. To stay informed, check our news pages and the Paper Packaging Monitor Europe.

[fairtrader66] 25/2/2021 16:31

I would be surprised if the strength of GBP hasn't moved against this acquisition. $7 billion has become much less powerful very quickly. Unless it's $7 billion not including stock options.

I sold a third at 420 today.. with full intention of buying back in. I just don't see the likelihood of a £5 billion acquisition for a company that should be valued at £8 billion minimum