ORA was a beat across EBITDA, NPAT and EPS lines.

The analyst community didn’t love it, however, given the revenue miss, and there was an odd bunch of target price upgrades but call recommendation downgrades. It likely comes down to the outlook, which we touch on at the end.

The intraday pricing actional was also quite bizarre. At one stage that really was a 10% move.

The way I’ve framed ORA, over recent notes, is that “they didn’t downgrade“. Much has been made of the slowdown in volume across big retailers, everyone from Walmart to Pepsi, where there prices are going up, but the volumes are going down.

I.e., not great if you are the company who is wrapped around the product, e..g, the packaging company. In that example, what’s good for Pepsi will not be good for the bottling company.

That example is just meant to highlight what’s been going on, in general, in the packaging industry.

The cardboard company, below, was another good example of the slowdown, but subsequent stabilisation and recovery in volumes.

That gave us some confidence for packaging in general, and ORA in particular.

And, over the past 6 months, ORA has continued to surprise to the upside, given those pessimistic views.

Revenues were indeed weaker, overall, but at the segment level, operating efficiencies have meant underlying earnings have increased, in the North American arm, with the Australian experiencing a slightly weaker margin given cost-pass-throughs (e.g. higher aluminium costs).

Those operating efficiency comments can be a bit vague, and there’s not a tremendous amount more additional “meat” to parse other than management said, “the sales teams are operating more effectively”.


The sustainability angle is worth covering off on.

ORA have ambitions to take the proportion of recycled content to 60% in glass, up from 38%.

End clients do ask us about our ESG framework, and ORA (and AMC) are good examples of businesses that are dirty by nature (packaging, a kind of “necessary evil” in that we don’t know any other way to get liquid to people, e.g. Coke in can, or beef to your fridge, without wrapping it in something) but that are investing to do better, for want of a better description.

Cans are already operating at close to 60% by of recycled content, as are corrugated boards.

It is also a competitive dynamic; end customers (e.g. the Woolworths of the world) want to be able to say that their packaging comes from sustainable eco friendly companies, and it is already fair to say that if you (the manufacturer) aren’t trying to improve those clean credentials you won’t be in business for long.

It is difficult to assess how impactful the above is (that’s why ESG analysts exist, even though the comparability statistics have been shown to be almost useless) however it is nonetheless good to see public targets, ambitions, and goals that ORA is moving towards.


The outlook statements are not wildly positive.

However, we think the end product lines are still more defensive than many other parts of the market (e.g. consumer discretionary, or building product manufacturers) and as such, with ORA trading at 15x forward (equivalent to market) and a yield of 4.76%, it is a QGARP-like company (Quality Growth at a Reasonable Price) that is suitable for the current market conditions.

There is also the mild possible positive catalyst, re: China wine tariffs. As is the case for TWE, should that market reopen, it would clearly be a good thing for an Australian wine bottle manufacturer.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Receive our investment insights

Something went wrong. Please check your entries and try again.