Barring a pretty large drop in the sp early next week from Friday's close of ~540p, it looks like we'll get the nod for promotion on Wednesday, with the actual promotion taking place in mid-December.
Still holding here, but it's getting perilously close to the point where I might sell a % with a view to finding a mid-cap capable of delivering 20%+ annualised returns, which DH Smith has done very nicely over the last six or seven years or however long it's been now. As companies grow, continuing to grow at that rate becomes harder, hence the feeling that it may soon be the time to start taking profits.
Today's rise was a pleasant surprise and it was good to see the placing getting taken up above yesterday's sp.
I think I've been holding ( and adding ) here for at least five years now ( possibly more ) and the management have barely put a foot wrong, but I am a little nervous about moving into the US market so will take a closer look at Interstate over the next week or so.
I now have fair value at somewhere between 420 and 520p, so would probably take some profits if it got to 525p or so, but if the company keeps progressing as it has, then the likelihood is that "fair value" will grow by between 8 and 15% per annum, so it's quite possible I'll still be thinking about taking profits three or four years down the line.
Full year results look good but a lot of info to digest! Most things including div are up by more than indicated in the 'performing in line with expectations' Q3 IMS in March and the pre-close update from April.
They are also buying Interstate a US cardboard packaging Co. - which is a new market region. Funding via the placing also announced (6.6M shares @455) and more debt.
The European earnings translate into more GBpounds but buying a US Co. in Dollars will be expensive.
Overall there are some parallels with Bunzl and perhaps more so with RPC. The 'market' seems to like the whole picture given the large jump in SP today.
Perhaps we should watch out for an activist like Northern Trust putting the boot in on the accounts as they did with RPC. (after recent acquisition of Letica - also a family owned US Co) SMDS have perhaps got a more selective and spread out acquisition record.
I am continuing to hold here for the longer term. The only question is when is a good time to buy more.
The transcript of the results presentation session isnt up on the website yet but the slides are there.
Packaging company DS Smith (SMDS) is The Share Centres share of the week thanks to strong earnings now feeding through into dividend payments.
The company, which provides corrugated and plastic packaging and recycling services, has benefited from the growth in online retailing where cardboard packaging is widely used.
Analyst Ian Forrest said the latest trading update also pointed to the fact that recently acquired businesses have made solid progress and the group therefore expects to deliver on all five of its medium term financial targets.
He said the company had a good track record of boosting growth with well-judged acquisitions.
Strong earnings are now feeding through into dividend payments, which have increased substantially in recent years, and the prospective yield now stands at 3.6%, said Forrest.
Combine this with good sales growth, a solid record with acquisitions and a cost-cutting plan, we continue to recommend DS Smith as a buy. The shares are suitable for investors seeking a mixture of income and growth but also willing to accept a higher level of risk.
At the time of writing the shares were trading down 0.6%, or 2.4p, at 434p.
The Board declares an interim dividend for this half year of 4.6 pence per share (H1 2015/16: 4.0 pence per share). This represents an increase of 15%, demonstrating the confidence of the Board in the outlook for the Group and the considerable volatility in the sterling exchange rate in the half year. The dividend will be paid on 2 May 2017 to ordinary shareholders on the register at the close of business on 7 April 2017.
The exercise of his share options for £0.00 would realise taxable income of £2,993,696 and tax due of £1,347,163 approx. The value of the shares sold did not even cover the whole of the tax due and so that is more a vote of confidence that a negative action.
Seems like Miles Roberts chief exec ignored "Questors advice"
Miles Roberts has cashed in after selling shares worth more than £1.8million.
The DS Smith boss, who lives in a six-bedroom house in Hertfordshire worth £2.2million with his wife Gillian and their four children, sold 456,026 shares in the packaging company at 395p each.
It leaves the couple, who sold £5.6million of shares in 2013, with a holding of 1.6million shares equivalent to a stake of 0.2 per cent in the company, worth £6.4million.
It comes a month after the company reported its annual results which saw revenues rise 9 per cent to £4billion in the year to April 30, while profits grew 16 per cent.
Packaging group DS Smith has a good track record of inflation beating dividend increases and the full-year results out yesterday, which sent the shares soaring more than 6pc higher, underpin another strong period of growth........
The deal making has increased risks to shareholders with net debt levels rising £450m during the year to £1.1bn at the end of April. The reassuring point for investors is that the company has a habit of reducing debt levels quickly because it generates plenty of cash.
The shares look decent value trading on 12 times forecast earnings and offering a forecast dividend yield of 3.6pc.
The dividend has more than doubled during the past four years, easily outpacing inflation.
The only note of caution we would sound is that packaging has a history of being a cyclical business. If we apply an average of the earnings per share from the past five years, which smooths out business cycles, the shares trade on a not so cheap 21 times earnings.
That said, the company is growing earnings, the full-year dividend should rise by about 8pc and wed be happy to hold for the income."
Finals Presentation looks encouraging but intended to portray favourable outlook
slide 16 Div per share CAGR = 26% for 5 yrs. Slide 33 shows over 60% of revenue is in Euro.
From the March trading update conference call: CEO & CFO responses to the Brexit question:
MR - ''And on Brexit it's very interesting because the UK is obviously one of the countries that we work in, we've got a fabulous presence here and absolutely it's a very important area but at any one time we have quite a few local issues, we've just had one with Catalonia and people wanting to break away. It is possible that 200000 votes are reached in the Netherlands and the Netherlands go for some sort of referendum, we've got Tyrol etc. At any one time when the economic environment is difficult we face these countries potentially breaking away. It doesn't have any particularly onerous near-term consequences. I think we tend to produce and supply in a single country, obviously where there are borders in Europe you get more flows but the UK is certainly a more contained market because you just can't transport the corrugated packaging really cost-effectively across the Channel.
So we don't think it will have a material effect on us, certainly in the short-term. I think in the longer term it just depends what our customers do, if they start to shift production overseas; if they do, then obviously we will seek to rebalance but I think that will be in the longer term. We do plan for these things; we plan for it for Catalonia, we plan for it for lots of places, we planned for it for Scotland. We work with our customers on a pan-European basis and obviously we're in Greece as well; we're the market leader in Greece by some way and we worked very closely with our customers there when I think there was a real danger that it was going to come out of the Eurozone but we planned for that and worked with our customers and they were very clear with us that they have manufacturing centres around Europe, they pay us in a certain currency and whether the economy is in or out it doesn't make very much difference.''
AM - We manage the balance sheet accordingly so we don't foresee issues on that front. Our businesses are headquartered in Europe, in Brussels. The UK for us is a head office and a local market but as Miles said, we plan for it, we work through the consequences. It's a question we get asked a lot, a lot of shareholders are interested; I think we give reasonable comfort that...You don't know what you don't know but in terms of how it will impact our business, we see it as negligible if at all in the very short-term and then as Miles said longer-term for the UK specifically, I mean there will be issues around capital investment and where some of our customers locate but the advantage of having as much pan-European business and in Europe as we are, we think we're pretty well insulated.''
GLTA through the turbulence! SG
The market appears to have given te results an initial thumbs up tejo ( up ~75 to ~415p as I type )
A quick glance through the report suggests most of the headline figures suggest underlying profits are growing between 10 and 15% IFRS profit is pretty flat though. But If we get growth of ~12% in the current FY that'd put us on a forward eps of ~30p so fair value is probably anything up to something like 460/470p ?
Anything much above that and I'd be tempted to take profits
The proposed final dividend is 8.8 pence (2014/15: 7.7 pence), giving a total dividend for the year of 12.8 pence (2014/15: 11.4 pence). Dividend cover before amortisation and exceptional items was 2.1 times in 2015/16 (2014/15: 2.1 times) and dividend growth is consistent with earnings growth at actual exchange rates.
The final dividend of 8.8 pence per share will be paid on 1 November 2016 to ordinary shareholders on the register at close of business on 30 September 2016.
The already weak £ should be of material benefit to SMDS in view of the strength of their European businesses, especially in the comparatives. This well managed business looks to be in a good position irrespective of the referendum vote and may even gain a little from the Mondi problems. have added a few to-day.
... was unspectacular, but reassuring. The city seems to have given it the thumbs up and pushed the sp back above £4 again. The sp has been stuck in a rut for a while so, who knows, it might at last break through 450p ?
DS Smith has set itself various performance criteria to beat, and duly beaten them
Revenue £1.95bn Dividend 4p
It is now more than five years since Miles Roberts arrived as chief executive of DS Smith and vowed to make it the leader in recycled packaging for consumer goods. As mission statements go this is not exactly up there with putting a man on the Moon, but he has achieved his aim.
The company has set itself various performance criteria to beat, and duly beaten them. Return on sales then was below 5 per cent; today it is 9.4 per cent, at the top of the stated 8 to 10 per cent range. DS Smith has done this, along with other packaging companies in different areas such as Mondi and RPC, by buying smaller businesses in Europe, putting them together and cutting costs.
It has also worked closely with customers such as the big supermarkets in developing the sort of packaging they need to promote greater efficiencies.
The figures for the half-year to the end of September on the face of it suggest this process is going into reverse, which may explain the markets perverse reaction to mark the shares 21½p lower to 395p. Revenues are off by 1 per cent, pre-tax profits by more than a quarter to £91 million.
Revenues, though, were hit by the fall in the euro against the pound DS Smith has less than a quarter of its sales in the UK. At constant currency rates they were up by 6 per cent. Profits were hit by £48 million of exceptional restructuring costs, including the closure of a paper mill in the UK, and adjusting for this they were up by 5 per cent, even allowing for negative currency movements, at the operating level.
The key indicator, like-for-like volume growth, which indicates market share gains, is meant to beat GDP by 1 per cent. It came in a further percentage point ahead of this. DS Smith spent about 500 million on three acquisitions in the period, and picked up another in Turkey since the end of the first half. The assumption is that such deals can continue at a similar pace, stoking up the engine for further progress in due course.
There are certainly, as the other acquirers have found, any number of smaller packaging companies seeking new ownership as markets become more difficult or succession issues loom. The shares sell on 15 times earnings. The price fall looks an attractive buying opportunity.
MY ADVICE Buy
WHY Markets reaction is hard to fathom. DS Smith is still performing well by all the criteria it uses and building in future growth
There are also FX changes with Euro 1.28 in FY14-15 vs 1.35 to 1.40 this year with most earnings in Euros. Net debt is 906M pounds but 500M eurobond avoids currency translation. If the euro strengthens it will work in our favour.
Looking again at the capital markets presentation from october, the expansions coming out of the new acquisitions will only start to appear in 15/16 second half and through 16/17 as you say.
They now have more capacity across eastern europe where a lot of DS international customers like Mondelez are also expanding.
" Packaging group LSE:SMDS:DS Smith has recovered from last year's de-rating and is building decent momentum despite stiff headwinds. Consolidation is an ongoing theme in the industry, and acquisitions have played a major role in the 75% rally ..."
At first glance, these don't look like great results. Though adjusted op profit is up, PBT is down, as is cashflow, which always makes me look at the exceptionals to see if they really are one-offs
On the face of it though, they are exceptionals in that the main hits are restructuring and impairment of assets due to the closure of Wansbrough. We'll be getting another 30 million or in H2 related to Wansbrough and Lantero, but it should, hopefully settle down after that.
Happy to hold at the moment, but I think it'll be 2016/17 when we start to get some decent sp growth again, but I've wrong many times before.
From the recent RNS it seems that 5.3% of the company shares are owned by.....
'Threadneedle Asset Management Limited is wholly owned by TC Financing Limited, which is itself wholly owned by Threadneedle Asset Management Holdings Limited, which is itself wholly owned by TAM UK Holdings Limited, which is itself wholly owned by Threadneedle Holdings Limited, which is itself wholly owned by Threadneedle Asset Management Holdings SARL, which is itself wholly owned by Ameriprise International Holdings GmbH, which is itself wholly owned by Ameriprise Financial, Inc.'
No wonder these fund managers have such steep charges!
The proposed final dividend is 7.7 pence (2013/14: 6.8 pence), giving a total dividend for the year of 11.4 pence (2013/14: 10.0 pence). Dividend cover before amortisation and exceptional items was 2.1 times in 2014/15 (2013/14: 2.1 times). The final dividend will be paid on 2 November 2015 to shareholders on the register at the close of business on 2 October 2015.
<b>DS Smith plc Receives Buy Rating from Jefferies Group (SMDS)
September 24th, 2015</b>
Jefferies Group reissued their buy rating on shares of DS Smith plc (LON:SMDS) in a report published on Thursday morning, MarketBeat.com reports. Jefferies Group currently has a GBX 435 ($6.75) target price on the stock.
In related news, insider Roberts,Miles sold 675,698 shares of the firms stock in a transaction dated Friday, July 17th. The shares were sold at an average price of GBX 407 ($6.32), for a total transaction of £2,750,090.86 ($4,269,664.43).
Other equities research analysts have also issued research reports about the stock. Stifel Nicolaus restated a buy rating and set a GBX 423 ($6.57) price target on shares of DS Smith plc in a report on Monday, June 15th. Canaccord Genuity reiterated a buy rating and issued a GBX 370 ($5.74) target price on shares of DS Smith plc in a report on Thursday, June 25th. Investec raised their price target on shares of DS Smith plc from GBX 410 ($6.37) to GBX 430 ($6.68) and gave the stock a buy rating in a research report on Thursday, June 25th. Berenberg Bank lifted their target price on shares of DS Smith plc from GBX 350 ($5.43) to GBX 375 ($5.82) and gave the company a hold rating in a research report on Friday, August 21st. Finally, Goldman Sachs boosted their price target on shares of DS Smith plc from GBX 380 ($5.90) to GBX 430 ($6.68) and gave the company a neutral rating in a research report on Wednesday, September 16th. Two analysts have rated the stock with a sell rating, two have issued a hold rating and seven have issued a buy rating to the stock. The company presently has an average rating of Hold and an average target price of GBX 395.10 ($6.13).
DS Smith plc (LON:SMDS) opened at 402.9000 on Thursday. The companys market capitalization is GBX 3.79 billion. The stocks 50 day moving average price is GBX 400.03 and its 200 day moving average price is GBX 379.15. DS Smith plc has a one year low of GBX 231.82 and a one year high of GBX 423.70.
DS Smith Plc is a holding company. The Company provides corrugated packaging alternatives throughout Europe together with plastic packaging solutions globally. In order to support corrugated packaging operations. The Firm has a recycling company that accumulates corrugated cardboard and used paper, where the recycled paper utilized in corrugated packaging is made by the paper manufacturing facilities of the Company. DS Smith also design and fabricate particular kinds of plastic packaging. The Plastics businesscomprises two components, flexible packaging and dispensing (LON:SMDS) and returnable transit packaging (RTP). The FP&D business in the usa has had a great year, providing good profit growth as the company has found continued success of its Trutap merchandise and of tea-urn linings. In its European operations, it continues to be a year of investment, with an amazing reorganization in the European FP&D business.
Name Smith (DS) Epic SMDS
Sector General Industrials ISIN GB0008220112
Activites DS Smith Plc is an international Group focused on two major activities - Packaging and Office Products. It holds strong positions in many of the markets in which it operates: A leading manufacturer of corrugated packaging in the UK and France; The leading UK producer of recycled paper board; The largest UK collector and merchant of recovered paper; A leading worldwide supplier of bag-in-box packaging; The leading European wholesaler of office supplies. Index FTSE 250
Latest share price (p) 408.15 Net gearing (%) 66.28
Market cap (£m) 3,756.84 Gross gearing (%) 69.16
Shares in issue (m) 942.04 Debt ratio 52.54
P/E ratio 24.02 Debt to equity ratio 0.49
Divs per share (p) 11.40 Assets / equity ratio 3.24
Dividend yield (%) 2.86 Price to book value 3.69
Dividend cover 1.98 ROCE 0.08
Earning per share (p) 16.60 EPS growth (%) 10.67
52-week high / low (p) 423.70 / 231.90 DPS growth (%) 14.00
<u>Smith (DS) broker views,</u>
Date Broker Recommendation Price Old target price New target price Notes
16 Sep Goldman Sachs Neutral 408.15 380.00 430.00 Resumes
09 Sep Jefferies International Buy 408.15 435.00 435.00 Reiterates
08 Sep Investec Buy 408.15 450.00 450.00 Resumes
08 Sep JP Morgan Cazenove Overweight 408.15 420.00 440.00 Retains
21 Aug Berenberg Hold 408.15 350.00 375.00 Reiterates
<b>DS Smith plc Price Target Increased to GBX 440 by Analysts at JPMorgan Chase & Co. (SMDS)</b>
September 8th, 2015
Research analysts at JPMorgan Chase & Co. lifted their target price on shares of DS Smith plc (LON:SMDS) from GBX 420 ($6.38) to GBX 440 ($6.68) in a report released on Tuesday, MarketBeat reports. The firm currently has an overweight rating on the stock. JPMorgan Chase & Co.s price target indicates a potential upside of 11.87% from the companys current price.
DS Smith plc (LON:SMDS) opened at 397.500 on Tuesday. The stocks 50 day moving average is GBX 398.28 and its 200 day moving average is GBX 376.22. The companys market cap is GBX 3.74 billion. DS Smith plc has a 12 month low of GBX 231.82 and a 12 month high of GBX 423.70.
The company also recently disclosed a dividend, which will be paid on Monday, November 2nd. Stockholders of record on Thursday, October 1st will be issued a dividend of GBX 7.70 ($0.12) per share. This represents a dividend yield of 1.97%. The ex-dividend date is Thursday, October 1st.
A number of other equities analysts have also commented on SMDS. Stifel Nicolaus reaffirmed a buy rating and set a GBX 423 ($6.42) price objective on shares of DS Smith plc in a report on Monday, June 15th. Jefferies Group reiterated a buy rating and issued a GBX 410 ($6.23) price objective on shares of DS Smith plc in a research note on Wednesday, June 10th. Investec raised their target price on DS Smith plc from GBX 410 ($6.23) to GBX 430 ($6.53) and gave the company a buy rating in a report on Thursday, June 25th. Finally, Canaccord Genuity reissued a buy rating and issued a GBX 370 ($5.62) price objective on shares of DS Smith plc in a research report on Thursday, June 25th. Two equities research analysts have rated the stock with a sell rating, two have assigned a hold rating and seven have issued a buy rating to the companys stock. DS Smith plc presently has an average rating of Hold and a consensus price target of GBX 390.10 ($5.92).
In other news, insider Roberts,Miles sold 675,698 shares of DS Smith plc stock in a transaction on Friday, July 17th. The shares were sold at an average price of GBX 407 ($6.18), for a total transaction of £2,750,090.86 ($4,176,295.91).
DS Smith Plc is a holding company engaged in the supply of recycled packaging for consumer goods. The Organization supplies corrugated packaging solutions throughout Europe together with plastic packaging solutions worldwide. To be able to support corrugated packaging businesses. The Firm has a recycling business that accumulates corrugated cardboard and used paper, from which the Firms paper production facilities make the recycled paper utilized in corrugated packaging. DS Smith design and make particular types of plastic packaging. The Plastics business consists of two components, flexible packaging and dispensing (LON:SMDS) and returnable transit packaging (RTP). The D & FP company in the US has had a very good year, providing profit increase that is good as the company has found continuing success of its Trutap merchandise and of tea urn liners. In the European FP&D company, it is a year of investment, in its European operations having a substantial reorganization.
"The Questor Column:
Profits jump 20% higher at DS Smith:
DS Smith reported a 20% jump in pretax profits and rewarded investors with an inflation beating increase in the annual dividend. And there is every reason to think this steady performer can continue to pack a punch. The FTSE 250-listed packaging group experienced a surge in cash generation, which funded two acquisitions within the past few months, and Questor thinks the expansion, and an upgrade to the profit outlook, underpins the long-term investment story. DS Smith generates about 65% of its earnings in Europe, while more than 70% of its revenue comes from outside the U.K. The company makes cardboard packaging from wood fibre and from recycling its customers used boxes. The company announced another bolt-on acquisition with a 190 m (£136 m) deal for Grupo Lantero that will give it control over 10% of the Spanish packaging market. The deal comes after a smaller 35 m purchase of Grupo Andopack in Spain last November.
DS Smith and packaging is not without its risks as it has a history of being a very cyclical business. But the company is growing earnings and the dividend by double digits, while the strong balance sheet also provides options for growth or returns.
Let me repeat that I like the company and think that it has performed well, however, the net results are not nearly as good as they first appear. I can understand the company putting the best appearance forward BUT
If you look at the balance sheet, you can see that the Shareholders Equity has gone down by £103 million and that there is a negative working capital [position. Looking further at the statement of comprehensive income,, the profit in reality turns into a loss.
All the figures that are shown in the headline statement are before exceptional items and at constant currency rates of exchange. However, exceptional items are a recurrent feature and will occur again next year. Constant currency is fine for comparison purposes at an operating level, but it is actual exchange rates that are the reality. Other losses, eg pension fund liability have been charged to reserves which is standard practice but is a long term cost none the less.
Questor in The Telegraph is a consistent fan, and so am I but the figures need to be understood. Let us hope the euro rises next year.
DS Smith received a buy recommendation in today's Telegraph.
"...the company is growing earnings and the dividend by double digits, while the strong balance sheet also provides options for growth or returns. Buy."
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