I believe IVE currently generate about 50% of their revenue from...

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MarsC

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08/11/23

22:04

Post #: 70795934
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Originally posted by daicosisgod: ↑

Took a bit longer than expected. Here is the feedback I received about IVE Group's Jacpac acquisition from a industry veteran who knows the Jacpac business very well.
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Ashley is a good operator.

IVE paid 5.8 X minus debt which is a good buy, Jacpac will reach their target of $45 mill/$6,000 EBITA comfortably.
IVE have announced $2.4 mill of synergies, normally they are hard to convert however in this case IVE should be able to generate.
Going forward they have forecast Jacpac growing to $60 mill/EBITDA 11.9mill @ 20% over the ‘near term’ whatever that means, big ask considering his EBITDA today is only 13%. IVE have estimated the market at $800 mill which is correct, however quoted growth of 10% (last year) is not sustainable, we have seen a slow down this financial year in the FMCG industry which we feel will continue into FY25.
On the plus side there will be some good growth opportunities in the coming years for mid-size packaging companies. The retailers are pushing hard for non-plastic packaging solutions and the big three players in Aust that represent more than 50% of the market, are all now foreign owned.

OPAL- Nippon Paper Japan. Not continuing their lease in Victoria next year, not investing in equipment.
GPIA- USA paper mill. Recently divested 35 small-mid accounts including brands like Ego Pharmaceuticals.
Westrock – USA paper mill. Heavy focus on beer/ beverage industry, all decisions made by US parent company.

IVE
Good move for IVE to push into packaging, a necessity really as their core business ‘commercial printing’ is a low margin shrinking market. They bought a major competitor out last year (Ovato) for obvious reasons, it would be interesting to know what percentage of their sales are still in commercial printing i.e. magazines and catalogues as there is no upside in that market.

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I believe IVE currently generate about 50% of their revenue from traditional printing (catalogues, mags etc). The way I look at at, there are two elements to "growth". One is whether or not decline is terminal, or whether a new normal has been reached. Two, whether or not unit economics can improve with greater market share & fewer players (the caveat being the strength of the customers).

So more than "growth", I'm thinking in terms of stability & durability of earnings, with room to adjust pricing to match input costs (inflation). It's a less glamorous version of "growth", but it's a less sought-after one.

You give the sense, above, that Opal is possibly heading for the exits. I don't think that's correct.

IVE have indicated that they will be seeking shorter runs, to avoid competing with the likes of Opal. My question is whether or not these designs are unique to IVE. If so, why?

IGL Price at posting: $1.95 Sentiment: Hold Disclosure: Held
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