contentSlug

type

ContentSlug_ContentQuery

slug

ContentPageContentQuery

content

trendingContent

query ContentSlug_ContentQuery(
  $contentSlug: String!
  $type: [ContentType!]
) {
  ...ContentPageContentQuery_13QmVO
}

fragment CompanyDetails_Content on Content {
  __isContent: __typename
  companies {
    name
    description
    pageUrl
    id
  }
}

fragment ContentBasicInfo on Content {
  __isContent: __typename
  id
  type
  title
  lang
  companies {
    viewerIsFollowing
    id
    name
    pageUrl
  }
  tags {
    viewerIsFollowing
    id
    name
    pageUrl
  }
  ...PublishingDetails
  ...Reactions
}

fragment ContentMetadata on Content {
  __isContent: __typename
  type
  title
  lang
  pageUrl
  alternatePageUrls: translations {
    __typename
    pageUrl
    lang
  }
  imgUrl
  description
  ... on Video {
    liveTime
    videoUrl
  }
  ... on Webcast {
    liveTime
    videoUrl
  }
}

fragment ContentPageContentQuery_13QmVO on Query {
  content(slug: $contentSlug, type: $type) {
    __typename
    id
    type
    title
    isPremium
    lang
    htmlBody
    summary
    companies {
      forum {
        latestPosts {
          ...ForumPosts
        }
      }
      name
      id
      viewerIsFollowing
      pageUrl
      defaultInstrument {
        isin
        id
        marketOpen
        marketClose
        marketplace {
          region
        }
        returns {
          total
        }
      }
    }
    tags {
      viewerIsFollowing
      id
      name
      pageUrl
    }
    createdAt
    ... on Video {
      liveTime
    }
    ... on Webcast {
      liveTime
    }
    slug
    ... on CompanyReport {
      reportUrl
    }
    ... on ThirdPartyCompanyReport {
      reportUrl
    }
    ... on StockExchangeRelease {
      reportUrl
    }
    ...ContentBasicInfo
    ...ContentMetadata
    ...PriceAndRecommendation_Content
    ...CompanyDetails_Content
    ...ReportLink_Content
    ...KeyFigures_Content
  }
  ...TrendingContent_1jQ2Cn
}

fragment ForumPosts on ForumPost {
  text
  likesCount
  url
  author
  postedAt
  authorImgUrl
}

fragment KeyFigures_Content on Content {
  __isContent: __typename
  companies {
    defaultInstrument {
      estimateData {
        modelType
        reportingCurrency
      }
      snapshot {
        transaction {
          date
          actualized {
            year
            quarter
            revenue
            revenueGrowth
            ebitAdjusted
            ebitReported
            ebitda
            enterpriseValue
            epsAdjusted
            dividend
            dividendYield
            sharePrice
          }
          estimates {
            year
            quarter
            revenue
            revenueGrowth
            ebitAdjusted
            ebitReported
            ebitda
            enterpriseValue
            epsAdjusted
            dividend
            dividendYield
            sharePrice
          }
        }
      }
      id
    }
    id
  }
}

fragment PriceAndRecommendation_Content on Content {
  __isContent: __typename
  createdAt
  companies {
    name
    pageUrl
    defaultInstrument {
      priceData {
        tradeCurrency
      }
      snapshot {
        priceData {
          date
          lastPrice
          tradeCurrency
        }
        transaction {
          date
          recommendation
          targetPrice
        }
        prevTransaction {
          recommendation
        }
      }
      id
    }
    id
  }
}

fragment PublishingDetails on Content {
  __isContent: __typename
  createdAt
  publishers {
    name
    imgUrl
  }
  authors {
    __typename
    id
    name
    slug
    imgUrl
    jobTitle
  }
  ... on Video {
    liveTime
  }
  ... on Webcast {
    liveTime
  }
}

fragment Reactions on Content {
  __isContent: __typename
  id
  reactionGroups {
    reactionType
    reactionsCount
    viewerReacted
  }
}

fragment ReportLink_Content on Content {
  __isContent: __typename
  type
  isPremium
  ... on CompanyReport {
    reportUrl
  }
  ... on ThirdPartyCompanyReport {
    reportUrl
  }
  ... on StockExchangeRelease {
    reportUrl
  }
}

fragment TrendingContent_1jQ2Cn on Query {
  trendingContent(type: ARTICLE) {
    __typename
    id
    title
    lang
    pageUrl
    createdAt
    type
    imgUrl
    companies {
      squareLogoUrl
      name
      id
    }
    authors {
      __typename
      imgUrl
      id
    }
    publishers {
      imgUrl
    }
  }
}


huhtamaki-bargain-binned-share-stays-in-shopping-cart

__typename

title

isPremium

lang

htmlBody

summary

companies

createdAt

publishers

authors

reactionGroups

pageUrl

translations

imgUrl

description

Head of Research

Antti Viljakainen

Huhtamäki is a manufacturing company. The company conducts operations in the packaging industry. The company's packaging is used for food products and includes fiber packaging, cartons, copper and other containers. The products are mainly delivered to customers in the food industry on a global level, mainly in Europe, South America and Asia. The company's head office is located in Espoo, Finland.

Huhtamaki’s opinion is that the packaging regulation is a good thing. The company now needs some kind of positive pulse for the share price to wake up. A large & sensible acquisition, a substantial share buyback program on top of the dividend, an improvement in the situation of the main market USA, etc.                   Huhtamaki              Huhtamäki on tyytyväinen pakkaus- ja pakkausjäteasetuksen hyväksymisestä...

Hi. I have also been pondering the reason for this “downward trend”. As one possibility, I have been thinking about the EU’s new Packaging and Packaging Waste Regulation, where one aspect is the transition from single-use packaging to reusable packaging. The regulation has already entered into force, and the transition period ends in the autumn of next year. Although the regulation focuses on reducing plastic packaging and minimizing its role in the market, it also sets targets for takeaway food products regarding the transition to so-called reusable packaging, i.e., packaging intended for multiple uses. A couple of points from the new directive: “Consumers should always have the option to purchase takeaway food and beverages in reusable packaging or their own containers under conditions at least as favorable as those offered for food and beverages in single-use packaging” and “Economic operators selling takeaway food or beverages should offer consumers the option to purchase food or beverages in their own containers as well as the option to purchase food and beverages in reusable packaging”. I don’t know how much this will be reflected in the competition within the packaging industry and the development of demand in the EU region in the coming years. Opinions?

Huhtamäki has generally done its job as well as can be expected in the prevailing market situation. The dividend is developing well and indebtedness is on a downward trend. I would give a clean bill of health to the analysts who have been on the “add” side for a long time, because the decline in valuation levels cannot be priced to continue forever. Often it sounds like people are more worried about the share price development than the business. This is naturally completely pointless if other things are handled properly and in an upward direction. The company will continue to have good, bad, and steady times regarding share price development. Consider the years 2010-2016, for example; the company’s value multiplied (10e—40e).  Huhtamäki’s dividend in 2016 was 0.73e per share, and in a few years, it will be double that. So, with one share, you now get significantly more value than, say, 10 years ago. I’ve also noticed that share prices and company CEOs don’t call your phone to tell you when they are on sale. You have to be patient and trust that things will normalize in the long run.

I think now would be a good time for buybacks, considering the share price and target prices along with the company’s quality, type, and situation. Rather than just buying when the party is in full swing and the peak cycle earnings are discounted for the next hundred years.

Hi! Excellent question and a timely theme! Following the change of our CEO in January, we have stated that all measures to support value creation are on the table. As background, we have reduced our leverage to the target range of 2-3x (net debt/comparable EBITDA). With this support, we also managed to improve our credit rating to “investment grade” this year, which should help with financing costs in the long run. The conditions for reasonably good cash flow also exist, as we have reduced investments. Regarding cash flow, the biggest question (with our business model) is always the change in working capital, especially fluctuations in raw material prices. In capital allocation, the top priority is growth, both organic and through acquisitions. We are actively looking for targets, but at the same time with a very disciplined approach regarding price. We have increased dividends for 16 consecutive years now, so the growth is starting to have a value of its own. We have stated that we aim for a dividend payout ratio of 40-50%, and for last year we were at 44%, so there is still room for maneuver in that regard. We do not rule out share buybacks, but growth is important. Regarding acquisitions, there is always uncertainty about whether they will materialize, which is the biggest question mark regarding the implementation of capital allocation. I hope this helps! /Kristian

Traditionally, Huhtamäki has allocated its capital especially to organic growth investments, steady dividend growth, and occasionally also to acquisitions. Indeed, over the past year or so, more room for maneuver has started to accumulate on the balance sheet, as net debt/EBITDA has gradually drifted towards the lower end of the target range (2x-3x). Share buybacks have been discussed in several analyst calls, and if I recall correctly (@Kristian_Tammela can supplement/clarify), Ralf/Thomas have responded that the company is considering options, even though the leverage drifting to the lower end of the target level doesn’t create any acute hurry or money burning a hole in the pocket. I would assume, however, that during the next year (possibly even in connection with the financial statements), the company will present some new plans regarding capital allocation. In my opinion, share buybacks would be a very good option for capital allocation at the current share price level, although I do believe that they will stick to the slowly growing dividend. There could be room for both, considering the balance sheet situation and the fact that capital expenditure on organic investments has been tightened (rightly so, as the investment pace has been high in recent years and not all investments are yielding yet and/or capacity is not full). The wild card is, of course, those acquisitions and inorganic growth, which I understand are also being sought. However, assessing the latent opportunities in these and their opportunity cost relative to, for example, share buybacks is quite difficult in advance without knowing the details. It is certainly clear that the melting of one’s own multiples limits the room for maneuver and payment capacity on the acquisition front to some extent, even if the deals were financed with debt.

I don’t own Huhtamäki shares, but I have thoroughly scrutinized the company a couple of times with potential ownership and valuation in mind. Huhtamäki has gradually improved its operations, offers broad diversification with its global reach, and with a stable company, one can sleep peacefully at night. Many like the ever-growing dividend. Compared to the average pricing of the 2020s, it could now be bought from the discount bin  But I haven’t bought it, and this is also, and especially, related to two clusters of issues that were not presented in the otherwise excellent video. In earlier times, Huhtamäki’s relatively strong position in the US market could have been considered a strength. Almost half of the bottom line, profit from the North American segment. However, there is now a double challenge in the market: political risk and K-shaped consumers. The White House’s incessant messes, subjugating the FED to Trump’s servant, reckless indebtedness, regulatory chaos with overnight decrees, goals to dilute the dollar’s value, etc. The political risk meter in Huhtamäki’s core market is elevated, and there’s no telling what tomorrow brings. Among US consumers, a steady change is underway on the K-curve. A small elite group is getting even richer, and the majority of the population has livelihood problems. Even if the thin upper elite frequented McDonald’s 3 times more, that wouldn’t compensate for the majority’s relatively or even absolutely worsening position as consumers. In my scrutiny of the company, I also noted the minuscule commitment of its board members to Huhtamäki. Printing out their owned shares might cover a sauna bench, but not much more. So, do they not have faith in the company? Furthermore, if Huhtamäki’s capital allocation is so optimal, as @Antti_Viljakainen states in the video, and the share price is in the discount bin, then why hasn’t it bought back its own shares? “There is money” A good company, not expensive compared to its history, but, but…

Huhtamäki

Huhtamaki’s Q2 report was weaker than we and the market expected due to problems focusing on the Flexible Packaging division, but estimate changes are minor. Huhtamaki is valued clearly below its long-term average levels. 

<p>We reiterate our EUR 39.00 target price and Buy recommendation for Huhtamaki. Huhtamaki&rsquo;s Q2 report was weaker than we and the market expected due to problems focusing on the Flexible Packaging division, but estimate changes are minor. Huhtamaki is valued clearly below its long-term average levels. Thus, we feel that the earnings growth we expect from the company next year, good 3% dividend yield and the upside in the valuation offer a clearly higher expected return than the required return, especially in the medium term. However, the share does not necessarily have fast growth drivers before a more concrete market pick up.</p>

	2022	23e	24e
Revenue	4,479.0	4,252.9	4,406.0
growth-%	25.3 %	-5.0 %	3.6 %
EBIT (adj.)	395.1	366.7	400.0
EBIT-% (adj.)	8.8 %	8.6 %	9.1 %
EPS (adj.)	2.49	2.12	2.34
Dividend	1.00	1.02	1.05
Dividend %	3.1 %	3.5 %	3.6 %
P/E (adj.)	12.9	13.7	12.4
EV/EBITDA	7.8	7.9	7.0

Huhtamaki: Bargain binned share stays in shopping cart

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Key Estimate Figures20.07.2023

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