Smurfit Kappa Group’s focus on innovation and differentiation is not just an additional cost of doing business. Rather, it is a strategy to help the company to gain market share and customer loyalty and at the same time increase both revenue (price achieved for corrugated) and margins. While this may not impact returns in the short term, this strategy clearly underpins the company’s recently revised long-term return target of 15% – unheard of in this industry in an historic context. SKG’s plan to transform its business in this way is not reflected in the current valuation, even after the recent rally in the share price. A structural re-rating is merited and we are very confident in retaining our ‘Outperform’ rating.
The latest from Smurfit Kappa Re its Capital Markets day. "The event will focus on Smurfit Kappa’s differentiation initiative with examples of its practical application and the tangible benefits expected. No material new information will be disclosed during these events and the Group will not be commenting on current trading". I think this statement could be translated into two short words which I am sure are not allowed on this forum. But is something happening..........
......And a tip of the hat to you sir. Its been dumped heavily this morning. I'm actually a little embarrassed that i missed the ex-dividend date. I just didn't own enough to care about the dividend.....but to have missed the short trade was unfortunate....
Very true. I bought into this on the back of the management, but also the fact that the brokers were basically screaming about how undervalued it was. I was very happy when it finally re-rated. Its is a very volatile share though, and i can see how day-traders might like it, which may well push the price around a bit. Even with positive european PMI's, price hikes and QE, I found a jump like that surprising. Results season starting in the US today; sentiment could change very quickly. Glanbia is, like SKG, a very very solid company. Companies like these got taken out with all the other thrash in the financial crisis, but were the diamonds in the rough....if you were lucky enough to have anything left.
I accept everything you are saying, and maybe as a man who thought we were all done at circa €25, perhaps this will sound like sour grapes. But its up another 3.5% in 9 minutes of trading this morning. SKG is a great company, but are people now just buying anything to get an exposure to QE? Or is there something we don't know (like watching BG's share price yesterday afternoon)?
True, but it really depends on how you look at it. I guess that as a stockbroking firm they have to trade on the fundamentals as they stand, rather than front-running the market. For example, a poor take up of the TLTRO this morning. The ECB is now in a crisis. They cannot meet their commitments without QE (although they may not meet their commitments even with QE, but thats a different story). More liquidity, more risk taking. And this stock seems to accentuate moves up and down in the markets. Its already on the move up this morning based on a belief that QE is on the way. Selling seems to me to be a mistake. And thats not including al of the facts you just outlined about the strength of the company; debt paid down, strongly generating cash and incredibly well run.
Based on our top-down view about economic slowdown in Europe, we are removing Smurfit Kappa from the core portfolio over concerns that slower economic growth could impede profits  In our view, slower growth in the Eurozone could hamper the company’s ability to pass through price increases, and could affect demand  We retain the proceeds of the sale in cash, which now stands at 13% Comment: The financial position of Smurfit has dramatically improved in recent years, as the balance sheet has been transformed by a significant reduction in debt; however, the underlying economic situation in its primary markets is fragile in our view. Eurozone GDP growth is forecast to be just 0.8% in the first half of 2015, and the risk of disinflation is a serious concern in the single market. Economic data in the region continues to deteriorate, for example both French Industrial Production and Manufacturing Production coming in below expectations this morning. We have always had concerns about Smurfit’s operations in Venezuela, given the volatile nature of the country and the uncertainty surrounding government policy. Lower oil prices add to our concerns about the Government’s ability to fund its activities, and the potential for the assets of foreign companies to be seized. We will re-examine the position once the economic landscape in Europe firms up satisfactorily
I'm beginning to think that they guy in Goodbody's might have been onto something. What precisely happened in the paper and packaging industry today to makes this company worth nearly 5% less than it was this morning? Tesco, in the middle of a firestorm of controversy over their accounting practices, is down nearly 5% today.
Sorry, I shouldn't have said Dermot Desmond...I have no idea if he has lost money or not. In relation, to Denis O'Brien, I think he has widely admitted his own losses in INM thus far. As for 'unfair' coverage of Denis O'Brien, in my book in could not be unfair enough....no matter what the source. What he was found to have done by the Tribunal, in my view, is enough to have your citizenship revoked. I would apply that logic to every person found to have done anything similar, no matter who they are.
One of the things that gets mentioned in relation to INM is the large shareholders. O'Brien and Desmond are big big players, and i have no doubt that they have a plan for the company. However, they have both lost a huge amount of money of INM....and they may well have written it off. As in, they are happy to take up a rights issue and try and turn the ship around, but at the same time they may regard the investment as already lost. I really don't know. There is not much point in leaving at 18Cent when you are down i nearly 500 Million. You might as well see if some of it can't be rescued.
The Irish Times is owned by a trust. Its been around since the 1800's. I'm not sure what is debt position is, but I have no reason to believe that it is going anywhere any time soon. I actually don't think that the Irish Independent operates in the same space. The Irish Times, whatever you think about it, is of a far superior quality of.....everything. The Irish Independent is more concerned with leaked pictures naked celebrities. It is a tabloid, as are all the other papers in the INM group. If the overall group can grab enough of the trash market, as well as diversify, they might do well. A move to highbrow journalism would not suit them.
Just had a read through the H1 2014 results there, along with some of the broker commentary on them. I have to admit that it is very hard to see where this is going in the medium term. Reducing debt is great; if you are Smurfit Kappa. If your top-line revenue is decreasing year on year, its hard to be overly positive about how much less you owe. And 30% increase in digital advertising flatters to deceive; its an increase from 3 to 3.9Million. At the same time they have lost more than that in the reduction in print advertising, which contributes 10 times more to their revenue than digital. It looks a lot like someone trying to swim really hard into a current. Getting nowhere but becoming exhausted. And as for this nugget "Irish Independent continues to dominate the quality daily market"....come on. Who are they kidding. Its bargain basement stuff the indo.........
APN Results are out next Wednesday. INM still hold a reasonable chunk, although they didn't take up their rights in the the last issue of shares. My first encounter with APN was their last set of results, which I thought to the untrained eye looked pretty good. They were getting out of peripheral businesses; off-loading poor investments; consolidating ownership where they wanted 100% control and generally making the business more streamlined. They were also getting heavily into those god-awful morning radio 'shock-jocks' that pervade Australian radio, but which they seem to love. As I recall they also had a lucrative contract for outdoor advertising with the trains in Sydney. Be interesting to see if their H1 results are good. I've a feeling they will be.