time to get set?, page-11

Here is what I like from the 4E

1. AUD falling will be a massive tail wind for them. Revenue is down @ the moment due to contract losses from clients moving mfg off-shore (plus fast food).
2. They bought the Carter Holt Harvey assets in March 2011; could well be their ‘Amcor’ moment as they are currently renegotiating these old unprofitable CCH contracts @ terms favourable to M&A assumptions.
3. EBA environment is improving.
4. Plenty of site consolidation – Sydney been 2 into 1; Melbourne selling Mt Waverley. So locking in acquisition synergies.
5. Capital structure looks good – gearing ratio is 31%, they have brought a new bank (WBC) into the banking syndicate, net debt reduced by another $6m etc.
6. Market share could improve from here if anything – 27% of Australian market (AUD$620m, 24% of NZ market NZ$100m). Aus is ‘fragmented’; suggests M&A opportunities.
7. Capex next year @ $6m, after that expected $4.5m. So pay-out ratio of 38% can improve from here.

Seems very cheap and I like the merger with the Amcor spin-off angle ... would be great synergies. But need a pull-back to get set (if I get one)