sharegardener
21 Nov 2018
I'm in A few thoughts! The SP is now (336p)even below the rights price of 350p (ie 3 for 11@350). Most rights issues have approx 30% discount to prevailing share price so the implication is that future prospects now are much worse than at the time of the rights issue. To me this doesnt seem right: 1 the shorters appear to be reducing their positions ( www.shorttracker.co.uk/company/GB0008220112/ ) 2 The preclose update for H1 was positive 3 The EU have approved the Europac acquisition 4 Long term growth prospect for packaging looks optimistic: e-commerce demand is up, big FMCG customers are taking up solutions from Europe into the US and globally there is a general trend away from plastic. 5 Weak £ is advantageous when converting Euro & Dollar profits 6 Directors havent been selling (the only recent buy was at 503p in sept) 7 Reasonable spread of institutional holders There is of course the Brexit uncertainty, the cost of debt with rising interest rates, competition from others SKG, MNDI in Europe and the very consolidated US market being difficult to penetrate effectively. They could have overpaid for recent acquisitions and may have to write down intangibles. The RPC saga illustrates the dangers of rapid growth by this approach! Its always hard to time the bottom of a dip but Im very tempted to buy more soon. SG
johnlawsonmoorlandminerals2
07 Nov 2018
I'm in Lawson 76, Thanks guys for your postings. I thought for a while I was the only person on this site who was interested in a cardboard packaging company! keep the comments coming!
Frankers70
07 Nov 2018
I'm in From my working and assuming the rights issue was fully taken up, the share price should have dropped from circa 500p at the time to £4.67. That we are at 387p at time of writing, the share price has reduced some 17% since then. Gut feel is that they could recover to 450p quite quickly on a 4th December positive update and outlook. Let us hope so…
sharegardener
07 Nov 2018
I'm in Odey hedge fund also has a large short position although this was reported 3 weeks ago - www.standard.co.uk/business/hedge-fund-odey-goes-30-million-short-on-packaging-giant-ds-smith-a3970301.html. 9 Dragons are putting more capacity into the US - reported in FT www.ft.com/content/842ce220-cbe1-11e8-b276-b9069bde0956 this has knocked all the packaging companies back even though DS Smith are mainly Europe based. Compared to the rights issue price, SMDS looks oversold but there’s still the Brexit uncertainty and £-$-Euro exchange impacts. The capital markets day webcast (> 2&half hours) and slides give a lot of promotional information about future strategy and updates on the Interstate integration as well as global packaging trends. Dividend CAGR 22% is great if it is sustainable. ‘Adjusted’ figures can be misleading if there are a lot of exceptional items from acquisitions but SMDS have usually aligned any new additions well. Im still holding but havent bought more since the rights issue. 358p was the low point but anywhere below 400p looks cheap. SG
Frankers70
07 Nov 2018
I'm in Bought 5,000 this morning. Profits to be materially higher and they have fallen over 20% since September mainly on global sell off and potential future Chinese competition abroad from what I can see. Could rebound and definitely benefit from any santa rally. Let’s hope so. GLA that are invested.
Boring_Bernie
21 Jun 2018
Rights issue coming Mainly to avoid being diluted, I’ll be taking up my rights, but, as @poleaxe says, if you want to further increase your stake, it doesn’t really make much difference whether you do that now or wait till after the rights issue. The main driver on that choice is to whether or not you think the acquisition is currently being undervalued by the market and the sp will catch up post-rights. BB
Poleaxe
21 Jun 2018
Rights issue coming It really makes no tangible difference to your overall cost if you buy cum-rights or ex-rights. What does make a difference is the market fluctuations and these may be exacerbated a bit by the way people like to play rights. I’d just buy the dips as you would normally, cum-rights or ex-rights. Buying ex-rights is also a bit simpler to administer.
sharegardener
20 Jun 2018
Rights issue coming 11@550 + 3@350 = 7100 /14 gives 507 as 'theoretical exrights price (TERP). The hope is that return on capital will exceed the costs but they are loading on more debt as well as raising equity (which dilutes the share price). If all goes according to plan then the deal should create value but this doesnt turn out to be the case for a lot of acquisitions! Expanding capacity through europe (especially Iberia) by acquiring Europac will give cost synergies and economies of scale as well as larger cardboard production capacity (including kraftliner - new as opposed to recycled). My impression is that there is a lot of capacity and potential for consolidation in packaging (SKG recent int’l paper takeover bid rejected) so DSSmith need to expand or potentially be a takeover target. As they are also moving into the US market and initial results from the Interstate acquisition look ‘ahead of expectations’ so they are moving to becoming a global outfit. They have also said that producing cardboard in US and supplying to europe can be cheaper than moving it around europe. Overall, SMDS still growing and have a good track record of extracting value from acquisitions and the e-commerce/FMCG demands for cardboard packaging are benefiting from the ‘plastic backlash’. It could be derailed by a stronger pound and rising interest rates so we need to see evidence of prompt deleveraging. SG
sharegardener
19 Jun 2018
Rights issue coming Rights issue will be 3 for 11 @ 350p. I will take up the rights but also wondering whether to buy more cum-rights now or wait for it all to go through and buy later. SG
sharegardener
14 Jun 2018
Rights issue coming From DS Smith financial calendar web page. ‘‘The announcement of FY2018 results is being accelerated to mid-June, reflecting the recent announcement of the proposed acquisition of Europac.’’ Could be tomorrow or early next week and may well coincide with the prospectus release for the rights issue. SG
sharegardener
04 Jun 2018
Rights issue coming Proposal to acquire Europac with a £1Bn rights issue and £645M extra debt announced today. Finals were scheduled for Thursday 28th June but todays RNS says rights issue details will be announced with the final results 'in June' with no specified date, so may be expedited.I suppose a 1 for 4 at 400p would do the job but we need to see how big a discount they will pitch it at.They have a good track record of integrating acquisitions and are also starting to make inroads into the US market. There's a fair bit of packaging M&A now with SKG in a bid situation. SMDS are on a growth trajectory with recent entry into the FTSE 100 and are positioning themselves as a big global player. Acquisitions dont necessarily create longterm value and can conceal poor performance but SMDS have always generated cost savings and improved efficiency as well as growing market share and securing big global customers such as Amazon & Mondelez.There is momentum in cardboard with plastic being perceived as bad and they have also announced a review of their plastics operations - some disposals here would allow them to deleverage below the 2.5x net debt to EBITDA level they will end up at Im slightly concerned they may be overstretching by growing in US and Europe simultaneously particularly with uncertainty around currency/FX. It looks like the pound will weaken further at least medium term but if it strengthens significantly and interest rates rise then the divi cover would struggle.SG
red fox
22 May 2018
US acquisition From Hargreaves Lansdown(Sharecast News) - Packaging business DS Smith has agreed to buy US-based Corrugated Container Corporation (CCC) for an undisclosed sum, in a deal that is expected to be immediately earnings-enhancing.DS said the acquisition of the family-owned business - which employs around 190 people across its four operations in North Carolina and two sites in Virginia - will "significantly" boost its box-making capacity and complement its existing footprint in North America.CCC's capabilities include a "strong" focus on high-quality, sustainable retail ready and display packaging, an area where DS Smith said it is achieving strong growth in Europe.Chief executive Miles Roberts said: "This is an exciting and fast-paced environment where we are experiencing strong momentum, following the successful integration of Interstate. The customer response has been excellent and increased demand from local and global customers for sustainable, innovative packaging gives us the opportunity to keep building capacity."CCC's strong reputation and quality machinery assets will help us to accelerate growth in the region, offering world class products to many more customers."Following completion of the acquisition, DS Smith's total operations in North America will comprise 23 facilities employing 2,000 people.
chouette
18 May 2018
Re: Nice ongoing uptick Brokers Davy have updated their recommendation from neutral to outperfom.[link]
Boring Bernie
18 May 2018
Re: Nice ongoing uptick Re "specific news"Not that I know of, I think the market is still reacting to the pre-close from the other week.If the sp keeps rising coming up to the results then it might be time to reduce a bit, but I seem to have been saying similar things for years, and it's never got to the point where I think we look particularly overvalued. Anything close to six quid might be tempting though
PJ Foster
18 May 2018
Nice ongoing uptick Nice to see a 2% jump up today - anyone aware of any specific news?Cheers,
