Orora: Plenty more to come
About the author:
- Author name:
- By Alex Lu
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- Date posted:
- 18 August 2023, 9:30 AM
- Sectors Covered:
- Orora's (ASX:ORA) FY23 result was above expectations with earnings for both Australasia and North America ahead of our forecasts.
- Key positives: Group EBIT margin +50bp to 7.5%; Balance sheet remains healthy with ND/EBITDA of 2.0x at the bottom end of management’s 2.0-2.5x target range.
- Key negatives: Revenue was softer than anticipated (-5% vs MorgansF and -4% vs Bloomberg consensus); Group ROFE fell 60bp to 21.6%.
- Management has guided to higher earnings in FY24.
- We increase FY24-26F EBIT by 5% while underlying NPAT rises by only 1-3% mainly due to higher interest costs.
- Our PE-based target price moves to (login to view) and we maintain our Add rating. Trading on 15.5x FY24F PE and 5.0% yield, we think the valuation remains attractive despite the recent strong performance in the share price.
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