09.2018罐头与玻璃包装行业报告：地理多样性真好_34页_888kb

Cans and Glass Packaging Sector Review Summary

Core Content

This report provides an analysis of the performance of metal can and glass packaging companies, particularly focusing on Crown Holdings Inc. (CCK), Ardagh Group S.A. (ARD), and Owens Illinois (OI). It outlines the impact of geographic and product diversification on earnings and highlights the performance of CCK following the acquisition of Signode in late 2017.

Main Points

• Geographic Diversification: While mature, consolidated markets are typically seen as stable, the 2018 performance showed mixed results due to shifting trade flows, Mexican beer imports affecting US domestic beer consumption, and extreme weather conditions in Europe.
• CCK Performance:
  • Rating Upgrade: CCK is upgraded to Outperform from Neutral, with a target price raised to $57 from $53.
  • Revenue Growth: CCK's beverage can volumes are growing at 4%, outperforming the global leader Ball Corp's 2% growth.
  • Deleveraging: CCK is on track to deleverage by 0.5x per year, with a strong track record of progressive operating income over the past 15 years.
  • Signode Impact: The acquisition of Signode, which represents ~20% of CCK's revenue, has added some cyclicality but is expected to positively impact future earnings and cash flow due to its strong free cash flow and diversified operations.
• ARD Performance:
  • Rating Downgrade: ARD is downgraded to Neutral from Outperform, with a target price cut to $15.3 from $21.0.
  • Leverage Concerns: The company's leverage reduction has fallen behind target due to guidance cuts and lower EBITDA outlook, increasing equity investment risk.
• OI Performance:
  • Rating Maintenance: OI is maintained at Outperform, with a target price cut to $24 from $32.
  • Earnings Growth: O-I is expected to deliver a 2015-18E EPS CAGR of 11%, with an anticipated 2018E-2020E CAGR of 13% from improved volumes, costs, and reversal of temporary headwinds.

Key Information

Valuation Metrics (2019E & 2020E)

Company	Price (US$)	Market Cap. (US$ m)	EV/EBITDA (x)	P/E (x)	FCF-yield (%)	Dividend-yield (%)	ND/EBITDA (x)	EBITDA margin (%)
CCK	46.77	6,323	7.3x	7.3x	12.4%	0.0%	4.0x	15.4%
Ball Corp	48.72	16,525	11.4x	18.0x	6.3%	0.9%	3.0x	17.3%
ARD	14.03	3,316	7.0x	7.0x	11.5%	4.0%	4.8x	16.5%
OI	16.97	2,702	5.2x	5.2x	13.6%	0.0%	3.2x	20.1%

CCK Financial Highlights (2017A - 2020E)

• Revenue Growth: Expected to grow from 8,698.0m (2017A) to 12,459.5m (2020E).
• EBITDA Growth: Projected to increase from 1,375.0m (2017A) to 1,927.9m (2020E).
• EPS Growth: Estimated to rise from $4.25 (2017A) to $6.44 (2020E).
• Net Debt: Expected to decrease from 4,919m (2017A) to 6,914m (2020E).
• ROIC: Projected to improve from 14.1% (2017A) to 12.0% (2020E).
• Leverage: Expected to decrease from 532.9% (2017A) to 240.8% (2020E).
• Free Cash Flow: Expected to increase from $503m (2017A) to $878m (2020E).

Signode Overview

• Acquisition Details: Acquired for $3.91bn in an all-cash deal completed on 3 April 2018.
• Revenue Contribution: ~20% of CCK's annualized revenue.
• Business Model: Operates on a razor/razorblade model, with recurring revenue from consumables and stable margins due to quick cost pass-through.
• Growth Potential: Organic growth expected at GDP level, with a focus on equipment and tools as a growth driver.
• Cash Conversion: ~92% for 2018, with strong cash flow generation.

Share Price Performance

• CCK: Derated since the Signode acquisition, but expected to resume share buybacks in 2020.
• ARD: Downgraded due to increased leverage and reduced EBITDA outlook.
• OI: Maintained at Outperform with a target price cut to $24.

Summary of Key Trends and Outlook

• Market Volatility: Developing markets may be volatile but offer faster growth, while mature markets are more stable but faced challenges in 2018.
• CCK's Strategy: Focus on deleveraging, geographic and product diversification, and leveraging Signode's cash generation capabilities.
• ARD's Challenges: High leverage and slow deleveraging pose risks, leading to a downgrade.
• OI's Outlook: Expected to show improved performance with a focus on cost and volume improvements.

Conclusion

The report concludes that while the food and beverage markets are generally stable, the performance of companies can vary significantly based on geographic and product exposure. CCK is seen as a strong performer with a credible path to growth and improved financials, while ARD and OI face challenges that affect their ratings and target prices. The analysis highlights the importance of diversification and the potential for growth in emerging markets.