Amcor (AMC) Update

Submitted by Craig Strzelecki on 20 May, 2007 - 09:14

Amcor (AMC) has an upgraded broker call of Hold with a share price target of $7.40 from sharemarket analyst Citigroup Investment Research. Amcor's restructuring plans for its European Flexibles business were close to the analyst's expectations. More importantly, the analyst is now factoring in its estimate of the option value associated with potential private equity interest in Amcor. Restructuring: Amcor is undertaking a a long overdue shift to a smaller number of larger plants, with a greater presence in higher growth / lower cost markets of Eastern and Southern Europe. This is expected to deliver €30m EBIT benefit by F10 (~5% earnings uplift). Private Equity Could Afford to Pay $9.40 / Share: This is based on achieving a 15% IRR on a 4 year investment horizon, gearing the business to 73% net debt / EV, reducing costs by $120m, and achieving an exit multiple of 7.5x EV / EBITDA. Their $0.60 / share of "private equity" option value is based on a 25% probability of this scenario occurring. Pressures Remain – The analyst's view on Amcor's underlying businesses remain unchanged. The analysts are particularly concerned about the outlook for Amcor's domestic fibre packaging business, with the high AUD/USD likely to pressure some customers to relocate to lower cost Asian markets.

Amcor Limited is listed on the Australian Stock Exchange (ASX) under stock code AMC. You can view their investor website here. AMC was listed on the ASX on 28 August, 1969. Amcor is a major global packaging company with annual sales of approximately A$11 billion, based in Melbourne, Australia, with 242 plants in 40 countries. World's largest producer of PET containers. Amcor has a broad range of plastic, fibre, metal and glass packaging products; PET containers; plastic and metal closures; along with packaging-related services. Chris Roberts is the Chairman and Ken MacKenzie is the CEO of Amcor. They have annual sales of around AUD$11.0 billion and 217 plants in 34 countries. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade AMC. Check your charts and good luck with your share trading!