07.澳大利亚纸制品与包装行业报告-2019年2月_23页_890kb

Paper & Packaging Industry Summary - February 2019 Reporting Season

Core Content Overview

This report provides an analysis of the upcoming reporting season for the Paper & Packaging sector in Australasia, focusing on three major companies: Amcor Ltd, Orora, and Pact Group. It outlines expectations for their first-half 2019 results, valuation metrics, key risks, and investment ratings.

Main Companies and Their Performance Expectations

Amcor Ltd (AMC.AX)

• Reporting Date: Monday, 11 February 2019
• Underlying Net Profit: Expected to be US$336.8m, up 2% on pcp (prior year comparable).
• Consensus Estimate: US$330m
• EBIT: Expected to be US$515.2m, flat on pcp.
• Consensus EBIT Estimate: US$517m
• Underlying EPS: Expected to be US$29.1c, up 2% on pcp.
• Dividend: Expected to be US$22.0cps, unfranked.
• Valuation: Target price is AUD16.15, which is 15% higher than the current price of AUD13.54.
• Rating: Buy
• Key Issues:
  • Expected to meet market expectations.
  • Full-year guidance for constant currency earnings growth and solid EBIT growth in both Flexibles and Rigid Plastics segments.
  • Raw material costs are easing.
  • North American Beverage volumes are expected to grow modestly.
  • Emerging markets are mixed, with potential earnings impact from hyperinflation accounting in Argentina.
  • Bemis acquisition is the key driver for share price movement.
  • Net operating cash flow is expected to decline by 20% to US$141.6m.
  • Net debt is expected to decline to US$4.2bn.
  • Amcor's P/E ratio is expected to drop from 18.5 (2018A) to 14.4 (2019E) and 13.2 (2020E).
  • P/BV is expected to decline from 12.7 (2018A) to 8.9 (2019E) and 7.2 (2020E).

Orora (ORA.AX)

• Reporting Date: Wednesday, 13 February 2019
• Underlying Net Profit: Expected to be A$109.7m, up 4% on pcp.
• Consensus Estimate: A$113m
• EBITDA: Expected to be A$235.9m, up 4% on pcp.
• EBIT: Expected to be A$171.1m, up 3% on pcp.
• Underlying EPS: Expected to be A$9.0cps, up 4% on pcp.
• Dividend: Expected to be A$6.5cps, 30% franked.
• Valuation: Target price is A$3.35, with the current price at A$3.20, a 7% discount.
• Rating: Hold
• Key Issues:
  • Full-year result could marginally disappoint due to lower-than-anticipated North American earnings.
  • North American demand remains flat.
  • Higher labour, freight, and paper costs.
  • OPS (Orora Packaging Solutions) is impacted by the delayed ERP rollout.
  • OV (Orora Visual) has replaced revenue at lower margins.
  • Cash conversion is expected to decline due to increased capex and aluminium supply changes.
  • Australasian earnings are expected to grow by 2% to A$123.6m.
  • North American earnings are expected to grow by 4% to A$62.9m, driven by lower AUD.
  • Net debt is expected to increase to A$872m.
  • Net operating cash flow is expected to decline from A$29.9m to A$-16.1m.
  • P/E ratio is expected to drop from 19.0 (2018A) to 17.8 (2019E) and 16.6 (2020E).
  • P/BV is expected to decline from 2.6 (2018A) to 2.5 (2019E) and 2.4 (2020E).

Pact Group (PGH.AX)

• Reporting Date: Wednesday, 20 February 2019
• Underlying Net Profit: Expected to be A$38.4m, down 24% on pcp.
• Consensus Estimate: A$42m
• EBITDA: Expected to be A$116.1m, down 4% on pcp.
• EBIT: Expected to be A$73.6m, down 15% on pcp.
• Underlying EPS: Expected to be A$11.4cps, down 31% on pcp.
• Dividend: Expected to be A$9.0cps, 65% franked.
• Valuation: Target price is A$5.60, with the current price at A$3.92, a 31% discount.
• Rating: Buy
• Key Issues:
  • Full-year earnings guidance may be upgraded due to easing raw material costs.
  • Australian earnings are expected to decline by 37% to A$35.4m due to higher resin and contract manufacturing costs.
  • International earnings are expected to increase by 24% to A$38.2m, benefiting from full 6-month contribution from Asian acquisitions.
  • Net debt is expected to increase to A$756m.
  • Net operating cash flow is expected to decline from A$29.9m to A$-16.1m.
  • P/E ratio is expected to drop from 18.7 (2018A) to 13.5 (2019E) and 11.0 (2020E).
  • P/BV is expected to decline from 3.0 (2018A) to 2.5 (2019E) and 2.4 (2020E).

Key Industry Insights

• Packaging Results: Expected to be mixed, with Amcor and Pact likely meeting or slightly exceeding expectations, while Orora may marginally disappoint.
• Raw Material Costs: Easing in both USD and AUD, which should benefit the second half of the year.
• North American Demand: Flat for Orora, but modest growth expected for Amcor.
• Emerging Markets: Mixed performance, with Argentina potentially impacting earnings due to hyperinflation accounting.
• Acquisition Impact: The Bemis acquisition is a key factor for Amcor.
• Valuation Methodology: Based on DCF and sum-of-the-parts (SOTP) models.
• Key Risks:
  • Integration of acquisitions.
  • Packaged food and beverage demand.
  • Currency movements.
  • Cost recovery.
  • Competitor behavior.
  • Regulatory changes.
  • Customer purchasing power.
  • ERP roll-out delays.
  • Aluminium supply arrangements.
  • Loss of major customers.

Valuation Metrics Summary

Investment Ratings

Conclusion

The Paper & Packaging sector in Australasia is expected to report mixed results during the February 2019 reporting season, with Amcor and Pact likely to perform in line with or slightly above expectations, while Orora may marginally disappoint. Amcor is highlighted as the key driver for share price movement due to the Bemis acquisition. Pact is expected to benefit from easing raw material costs, while Orora faces challenges from cost pressures and ERP delays. The valuation models suggest buy ratings for Amcor and Pact, with a hold rating for Orora.