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the possibility of a takeover has been hanging over SKG for a few years so not a bit surprised to hear IP have made an offer. No real knowing what happens next. Now that IP have shown their hand there may be other interested companies throwing their eye on SKG. With the +20% lift in share price is this a sell the news moment or a hang on and see where it goes opportunity?
Prior to this offer, Smurfit had a market cap of �6.5bn. IP�s market cap is approx. �24.3bn. Its current net debt/EBITDA is 3.49x, which suggests some there is not much headroom for an improved offer. Its FCF was reduced dramatically in 2017 from $1.1bn to $366m. This figure was $1.7bn. Cash from operations has also been declining from �3.07bn in 2014 to �1.757bn in 2017. However the majority of this was driven by the $2.2bn acquisition of Weyhauser Pulp Mills. When you take a look at estimated 2018 numbers, there may be some room for IP to come back with an improved offer. Net debt/EBITDA is expected to drop to 2.13x with EBITDA moving from $2.673bn to $4.232bn. Net debt is also expected to decline from $10.14bn to $9.02bn. Without any firm details on the initial proposal it is difficult to gauge whether or not IP will come back with an improved offer. It should also be noted that IP itself has been the subject of takeover speculation, most notably in 2017 with rumours of a bid by the Koch brothers. Smurfit Kappa is likely to trade above 2018 price targets on the back of this news in the short term. We maintain our Outperform.
Looks like someone is mopping up SKG shares... could it be International Paper back again ?
Is this one for the future, considering the backlash on plastics?
john mc , i think that was further back than last october , perhaps even the october before that ? im not trashing the company but some stocks just never get the respect they deserve , compare its performance to that of kingspan , i know kingspan has been knocking it out of the park but its so much more expensive smurfit kappa has underpeformed the market this past three years , i know you picked it up at 7 but that was when everything was on the floor , ten years ago the stock was close to 20
We talked about SKG last october bob when we were at sub €20. If I remember you booked a buy around 19 that you didnt fill? if you had bought at the 19.5 you would be up 30% now . Not a bad 6 month return...
that it couldnt join a european rally is worrisome IMO its a good company but a lousy stock
Bob this is the kind of share you buy and sit on for years in the knowledge that you money is in a safe place. If you follow Buffet, this is his type of company. SKG tends to lag peers for a time and then gain momentum, break resistance and keep going. I bought in 2010 at €7 and waited 2 years for take off. still here and +300%. Good businesses are hard to find so when you find and buy one thats cheap it should be held for years. I learned that lesson with Glanbia. Bought at €2 sold at €8, now its €18. SKG has stalled for the last couple of years but a good dividend makes it an easy hold. The Venezuela business had a big impact on the stall but that has been discounted at this stage. The cycle SKG works in is about to change. China is starting to suck up excess stock just as demand in Europe is growing. OK costs have jumped quicker that prices increases can be implemented but this year will sort that out. €60 a ton hikes on some lines are working through the system already with more to come. By year end SKG will be re-rated, so by this time next year we could be in the mid 30's. Not telling you what to do but IMO hold and hold.
hard to know whether we see a break out this quarter , apart from it being a seasonally weak time for markets , results were not exactly flawless , its a very cheap stock but has been for several years now , i think we pull back 10 % and at best touch the yearly high before next earnings
(ShareCast News) - Goldman Sachs recommended clients 'buy' Smurfitt Kappa on Monday after the shares fell by around 7% over the past month to open an attractive entry point, while Jefferies also rated the Irish packaging company highly. Smurfit remained Goldman's top-pick in the European paper and packaging space, as although the market has become increasingly concerned about a margin squeeze, this "is temporary in our view" as box prices are expected to increase in the second half to enable margins to recover quickly. Smurfit trades at an 26% discount to peers on a ratio of enterprise value to adjusted operating profits (EV/EBITDA), despite offering a 10.5% free cash flow yield, which is significantly above the 5.6% average for packaging peers. Rivals DS Smith and Mondi are both rated 'neutral' by Goldman. "A key risk to our packaging view is increased uncertainty in Europe related to the upcoming elections. Packaging is closely linked to economic growth and could come under pressure if uncertainty increases," Goldman said. Analysts trimmed their London target price to 2,425p from 2,500p.
changed units from whole Euros to GBP pence?!
up 3% in dublin. Hard to track it here.
Smurfit Kappa Trading in London switching to sterling today Smurfit Kappa has announced the group’s shares will commence trading in sterling on the LSE from the open of trading today. Ordinary shares on the Irish Stock Exchange will continue to trade in euro. The announcement is in line with Smurfit Kappa’s previously outlined plans provided on February 10th. It is one step in the overall process in seeking a primary listing on the LSE but does not yet represent formal application. Smurfit Kappa will formally apply for the primary listing following the publication of the group’s annual report. The process is expected to complete 20 days post application when the company will likely be eligible for FTSE membership. Smurfit Kappa remains our favoured stock in our paper and packaging universe with the most undemanding valuation and good visibility on earnings growth in the year ahead.
from Euros, to Sterling, that's all. Was in their announcement 10th Feb. Nice buys though.
Out those buys!!
What on earth is going on here?
A lot of big buys by by the big boys.
That the 3rd director to buy since results. positive sign?
yesterday the stock was trading more than 50% below its yearly high which was set around last june , the stock was in a downtrend for months , plenty of companies are doing very well right now yet their SP has been clobbered disney produced great results last night yet is down 5% today having closed at a near fifty two week low yesterday , its rare for a stock to soar off earnings when the stock was at a fifty two week low , as i said earlier , huge short squeeze with kappa , stocks often need to test lows again before they find a bottom so i think the stock will still be available under twenty euro in the coming few weeks , its fifty day is still under its two hundred , techincally , it might not be ready to sail up
as far as i can see there is a total disconnect between the sp of this company (and many more) and the financials produced on result days. Is it because trading computers cant read the reports or because the traders have lost the ability to do the sums and depend on fancy algorithms. Cyclical or not you really need to read the report to see the strength of SKG. they are producing almost 400million of free cash and growing that consistently. Every metric is positive and management exceptionally strong. this has continued into H116 and the company are already set up for a great year again regardless of a recession. Just one example, Kraftliner is a big part of this business and is traded world wide like a commodity. In europe 70% of SKG brown kraftliner production goes directly to their own higher value box production and the other 30% is pre swapped for raw materials they need to buy in. So one of their potentially weakest areas is 100% sold regardless of a poor 2016.
When a stock is at twelve month lows heading into earnings, its usually a sign of further downside , looks like a lot of shorts got burned today
Unless you were to be subject to a margin call you might not have been able to meet, i cannot get my head around selling this share into the results. Since they deleveraged, they have not seriously put a foot wrong.
smurfit is in a cyclical industry and that industry is in a serious bear market globally , i assumed it would join the rout , i expected it to go to 15 euro as that was the low around july of 2014 , smurfit was well down long before this current market rout thought it was more than shorting , this massive jump today may be no more than a short squeeze , i might well get another chance to buy where i sold
i'm disappointed for you Bob, you had a bargain and gave it away. The down trend never had anything to do with the cash making machine that this company is. Almost a 4% dividend as well. Still value though....
I sold yesterday like an idiot having bought two tranches @ 21.90 + 19.90, thought it would be 15 today , obviously a huge short squeeze this morning , this stock had been on a down trend for several months so things looked bearish