Stock Spotlight: Orora Limited (ASX:ORA)
This week's Stock Spotlight is ASX-listed Orora Limited.
About Orora Limited.
Orora Limited designs, manufactures, and supplies packaging products and services to the grocery, fast moving consumer goods, and industrial markets in Australia, New Zealand, the United States, and internationally. The company operates through Orora Australasia and Orora North America segments. It also provides glass bottles, aluminum cans, tabs, and ends, closures and caps, boxes and cartons, point-of-purchase displays, packaging equipment, rigid and flexible packaging, and general packaging materials and supplies. In addition, the company purchases, warehouses, sells, and delivers a range of packaging and related materials; sells equipment; manufactures corrugated sheets and boxes; and provides point of purchase retail display solutions and other visual communication services. Further, the company offers printing and signage, research and technology, product sourcing, automation and engineering, design, kitting and fulfilment, logistics, and digital technology services.
Source: Yahoo Finance
Key Stats
Key Stats
Source: Yahoo Finance, ASX. Data as of 29/08/24.
Price Performance
Growth Potential
- ORA may divest the OPS business, and we estimate the sale price could reach A$1.5 - 1.7bn for OPS. Proceeds could be used to significantly deleverage the balance sheet.
- Exposure to both developed and emerging markets’ growth.
- Near-term headwinds should be in the price.
- Revised strategy to become a specialised, value-added beverage packaging business
- Bolt-on acquisitions (and associated synergies) provide opportunities to supplement organic growth.
- Leveraged to a falling AUD/USD.
- Potential corporate activity (ORA has already received a proposal from Lone Star for $2.55 per share)
- Capital management (current on-market share buyback plus potential for additional initiatives).
Key Risks
- Acquisition bid does not proceed and any M&A premium in the share price evaporates.
- Competitive pressures lead to margin erosion.
- Input cost pressures which the company is unable to pass on to customers.
- Deterioration in economic conditions in US, EM and Australia.
- Emerging markets risk.
- Adverse movements in AUD/USD.
- Declining OCC prices.
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Disclaimer: This article does not constitute financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking financial, legal and taxation advice before investing.
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