PPG - Pro-Pac Packaging

[Joe Blow]

Pro-Pac Packaging Limited (PPG) is a manufacturer and distributor of biodegradable flowable and non-flowable voidfill protective packaging. PPG provides packaging solutions to general industrial products for diverse range of blue chip national and multinational customers throughout Australia.

http://www.pro-pac.com.au

 

[greggles]

Tough times for Pro-Pac Packaging. FY2018 financial results released on Tuesday reported a statutory loss after tax of $5.1 million in spite of increased revenue and EBITDA. Margins were impacted by the increasing costs of raw materials.

PPG raised $60 million in July via a placement at 34c, $48.1 million of which will be used to fund the cash components of the recent Perfection Packaging and Polypak acquisitions.

The share price looks like its settling around 25c after the sell off over the last couple of days. The new acquisitions should drive revenue growth in the current financial year, so this one might be of interest to the bottom pickers out there.

 

[barney]

Ouch!!

 

[Country Lad]

Ouch!!

There was even more "ouch" after that.
I noticed this one was on a steady upward trajectory since March so had a quick look.
After @greggles post it went steadily downhill which was not surprising with the instability.

• Issued 97.6 mil shares at $0.34
• Issued 25.5 mil shares at $0.39
• Numerous substantial holding changes
• Company Secretary resignation & appointment
• CEO resignation & appointment
• Change of Auditor
• Impairment charges
• Change of Chairman
• Kewdale facility fire
• CFO resignation & appointment

These comments in the recent trading update probably helped

Trading has been better than expected in the challenging COVID-19 environment and the company expects full year EBITDA1 , before significant items of around $30 million (FY19 - $28.1m). In addition, the company has continued to work diligently on working capital improvements and the net debt position at 30 June 2020 is expected to be around $60m (30 June 2019 - $82.9m).

The plan includes the transfer of manufacturing volume from the Chester Hill factory to PPG’s other Australian facilities, where the combination of existing and new equipment will be deployed to consolidate the group’s footprint and enhance its local manufacturing capability.

Prospects are looking a lot better

 

[Dona Ferentes]

having a good rebound, although come off the boil a bit. now 18c

A clear number two in the Australian flexibles market. Its main exposure is to agriculture, food and beverage and these are holding up in the current environment. It's been paying down debt from its cash generation, demonstrating the very good cash generation. ... can pick up Pro-Pac on a 13 times price to earnings and it's yielding 4 per cent.

 

[barney]

having a good rebound, although come off the boil a bit. now 18c

Don't know much about the Co. but the lack of meaningful Volume in general is a bit of a red flag for me. Bear in mind if I rag it out, it will likely jump another 25%

On a positive note, I see Investors Mutual have recently increased their holding by +30 million shares to hold 12% of the Co.

If I had to guess, I'd say its heading for a ranging period between 18 and down to 15 cents ... in other words, I have no idea

 

[Dona Ferentes]

Don't know much about the Co. ..

On a positive note, I see Investors Mutual have recently increased their holding by +30 million shares to hold 12%

and having a bit of an update. (don't hold) ... travelling sideways around 20c since July last year. Market Cap $160 million

James Marlay ( Livewire Markets ) : Well, I’ve asked both of you to bring along an ex-100 stock, so a small company, with attractive dividend prospects. Simon, let’s hear from you first. What’s your dividend pick?

Simon Conn ( Investors Mutual ) : A little company called Pro-Pac. I think the complexion of that business has changed quite a bit over the last two to three years. A new management team is in place as well; Tim Welsh runs the business. It’s really the second-largest player in the flexible packaging sector of the market. So packaging generates pretty consistent cash flows, and we’ve seen the other business deliver pretty good outcomes through a pretty difficult time.

So behind Amcor they are the number two in the flexibles market. And there is a strong tail of smaller operators. And I think that presents the opportunity for this business to grow through acquisitions and integrating those. Also, this business has a strong footprint. They’re consolidating sites. They’ve just closed their Chester Hill site which delivers $7 million in savings to the P&L of this year, which underpins your earnings growth. So on a P/E of nine times and yielding 3.5-4 per cent, we think that’s very attractive, and we think that will grow nicely over the next three to four years as they continue to consolidate the market.

 

[Dona Ferentes]

relevant thread?

A new law banning plastic packaging on most fruit and vegetables comes into effect in France from New Year's day.
Cucumbers, lemons and oranges are among the 30 varieties banned from being wrapped in plastic.
Larger packs as well as chopped or processed fruit will be exempt.
President Emmanuel Macron called the ban "a real revolution" and said it showed the country's commitment to phase out single use plastics by 2040.

French ban on plastic packaging for fruit and vegetables begins

Officials hope the law will prevent a billion items of single use plastics every year.

www.bbc.com

 

[divs4ever]

am surprised Macron wasn't the feature of a real revolution already