Smith (ds) Share Discussion Threads

[cruelladeville] 28/2/2024 08:32

Another week before we hear from Mondi? SMDS stock looks a bit in the doldrums to me. Not looking especially like a stock that's expecting a bid premium? Disappointing.

[laurence llewelyn binliner] 22/2/2024 13:35

#Anhar, it is difficult to nail the peak/trough of any cyclical business, if it is a decade long cycle for example money sat on the fence does not earn a dividend, and until last year did not earn any interest return either, so it is better invested into a share and mopping up the dividend income then letting it compound using the DRIP..

Half way in here adding on new ISA day 22/23/24/25 doubling each buy with 2 to go and the average cost is what it is, MnA happens in every sector, you cannot time that either but you can sit and wait for it to happen.. :o)

[anhar] 22/2/2024 12:46

This is well known in classical economics as the Hog Cycle. Farmers tend to invest in more animals and associated costs at peak demand. Inevitably, it turns down, they lose heavily and experience financial difficulties. Those canny enough to invest in expanding hog production around the nadir of the cycle do very well as they profit greatly from the recovery in demand and rising prices.

All very nice in theory but in practice it's hard to beat the psych. difficulty of going against the tide. And you never know when the recovery might come. If you get in too early it can get much worse before it gets better so you can still wind up in trouble.

Similar situations occur all over cyclical industries and with trading assets like shares or property etc.

[nightspot] 22/2/2024 12:06

Thanks Moorsie.(your post 4362). Very succinctly explained.

[drectly] 22/2/2024 11:55

Same for Oil and gas over a long cycle. It all provides good opportunities as long as you are OK doing nothing for long periods. Having stock that keeps paying a reasonable divi makes it easier.

[moorsie2] 22/2/2024 11:51

LLB - good shout.

It is indicative of much high cost engineering sectors

[laurence llewelyn binliner] 22/2/2024 11:47

#Moorsie2, much the same in the mining space, the cure for low prices is low prices which leads to mothballed projects and suspended investment and/or plants put on care and maintenance waiting for prices to pick up, conversely high prices lead to bigger investment leading into over supply and pricing then corrects downward to meet demand and to find buyers..

About the same timings too for many miners in the EV battery metal space..

[moorsie2] 22/2/2024 10:48

Nightspot - the paper packaging cycle has been there for at least last 40 years..

Demand cools (economy slows down) then excess paper chases less box demand so prices start to fall. This fall is then passed on i box prices and the fall becomes self energised.

It reaches a point where many paper mills are selling below average cost per tonne.

Producers then decide to shut (temporarily or permanently) the highest cost tonnage mills. This reduces capacity in the market. Then also destocking is over some demand picks up then also at some point the economy picks up and there is excess demand for capacity and prices move up fast. This is then fed into the box prices.

At close to peak of the cycle the margins are so strong that the industry usually invest in much more capacity and hence the cycle tips over into excess capacity vs demand.

And so it continues

[nightspot] 22/2/2024 10:42

Moorsie, could you please give a little explanation of how the paper cycle operates?

[laurence llewelyn binliner] 22/2/2024 10:38

#Moorsie2, thanks for your continued sector input here, I am long SMDS and have had it pencilled in all year to double down in the new ISA year 06.04.2024, as always timing is everything and if a bid comes along there is little you can do about it apart from roll with the results, if the share price drifts back should a bid not appear I will take advantage of it, if a bid does come in, then adding shares in the bigger/stronger business also makes sense going forward.. ;o)

[moorsie2] 22/2/2024 10:23

Even without a bid I am not sure 280 will happen.. That has been the valuation at the bottom of the paper cycle. As we progress through 2024 the cycle is on an upward trend.

MNDI talked about this morning of increasing orderbank and price increase actions in the market now.

So my industry experience would say we are now in a 300-430p range for this share

[laurence llewelyn binliner] 22/2/2024 09:55

We will see how it plays out, no bid and back to 280 pence, fine by me as I am looking to add, sooner or later consolidation in the sector will happen, MNDI may come back for another nibble.. :o)

[cruelladeville] 22/2/2024 09:30

I suspect you're right. DS Smith looks like being left on the shelf for now. I think it's only a matter of time before something happens though. Days as an independent business are numbered.

[elsa7878] 22/2/2024 09:00

Mondi climbing in the last week. DS flat to down. A whiff of no deal?

[moorsie2] 22/2/2024 08:42

Their cash generation was hugely impressive off a smaller business and in a cyclical through..

Balance sheet very strong

[laurence llewelyn binliner] 22/2/2024 08:37

No post period notes in the Mondi results for us to see wrt an SMDS bid, pretty much as expected, buy they have until 07th March to declare (or not)..

[upsondowns] 22/2/2024 08:24

Seems like their results went down well

[moorsie2] 22/2/2024 07:44

No mention by Mondi today - guess the next focus is DS Smith results day on 6th March, a day before the deadline for put up or shut up...

[upsondowns] 21/2/2024 11:27

Was meant to say higher lows

[moorsie2] 21/2/2024 10:20

pure guessing game at this stage...

[laurence llewelyn binliner] 21/2/2024 09:47

Mondi have until March 07th to confirm or deny their interest in SMDS and put forward a bid (or not), perhaps they will add in a post period note on their intentions tomorrow, but I am not confident they will.. ;o)

[upsondowns] 21/2/2024 09:47

Not really a sell off now is it? Just a natural trading pattern if you ask me. Lower lows and higher highs. Might see a bounce from here.

[sun1950] 21/2/2024 09:30

My guess would be the lack of an update but that might change tomorrow when Mondi announce results or alternatively talks are not going well just a thought

[moorsie2] 21/2/2024 08:50

hmmmm wonder if a sell off is happening ... do some people have news?

[moorsie2] 19/2/2024 11:38

Looks like more bets are being placed on a tie up happening...

Big few days ahead