can someone explain why PGH is so unloved?

Hi all

I've been invested in PGH for a while and it seems significantly undervalued. I first bought in at $2.36 about ~18 months ago, and have steadily increased my holdings (most recently today) to the point where it's now third highest by value in my portfolio. It's obviously not the sexiest stock in the world, but it still seems insane that it could be trading at around the $2.40 mark (and have been doing so more or less for 2 years).

Could someone give me the counter-argument justifying its current valuation? I'm interested in hearing others' thoughts so I can identify any risks I haven't thought of and consider my position.

As I see it, the positives are:

• Oligopoly position in the rigid plastics market with Visy, together accounting for ~70% of market share (~35% each), with no other competitor having more than 2-3%.
• Low oil prices for the past 12 months, which should now be feeding into raw materials (resin) prices.
• Rebound in contract manufacturing division due to COVID, largely offsetting any other COVID disruptions. This should also help the sale price of the contract manufacturing division (assuming that occurs).
• Currently trading on a P/E of approximately 10.
• Even once you account for the paying down of debt (see below), they're generating NPAT each year of about $80-$100M with a market cap of ~$800m.
• well-positioned for the future with exposure to the circular economy and increasing govt investment in recycling.
• Payout policy of 40%+ of NPAT should equate to at least 10c per share in dividends (ie a better than 4% yield at present, even during a period where they're paying down debt and posting lower NPAT than in 2016-18). Once debt is paid off this should increase progressively as finance costs are reduced, creating NPAT growth over the next few years.
• Possibility of cash injection of $200m+ from sale of contracts manufacturing division (as reported by the AFR based on estimates prior to recent rebound) creating further flexibility and ability to pay off debt.
• Growth in materials handling business.

The only obvious downsides I can see are:

• Their debt position - this appears to be the main thing investors are concerned about (and which, when factored in gives rise to an enterprise value of ~$1.5bn). Having said that (a) they are paying it down at a rate of $70m per year (not including any further funds used from the sale of the contract manufacturing division); (b) we have record low interest rates, so it's not the worst time to have a bit of debt; (c) Raph Geminder has a great relationship with the banks (he literally holidays with Shayne Elliott), and (d) even factoring in the debt they are paying back each year, they're still posting decent profits relative to their market cap which will only grow as debt is paid off.
• fear that they might not get a decent price for the contract manufacturing division perhaps? I'm conscious we haven't heard much about it since early October.
• Fear that the contract manufacturing division could fall away again post-COVID?
• Relatively flat performance in core packaging business (albeit with very high base level market share).

Does anyone have any other thoughts? Don't get me wrong, I don't see this shooting to $5-$6 anytime soon (it's a conservative company with solid, but not extraordinary growth prospects), but $2.40 seems crazy low. IMO somewhere between $3.20-$3.40 feels right.