Orora, the packaging company (cans, glass bottling for spirits and wine) downgrading by around 3% at the mid point, for the base business (excluding the newly acquired Saverglass) on “ongoing destocking” pressures.

The bigger downgrade was for Saverglass itself, which is running some 8% behind expectations. We wrote about this in our last note, that SG was potentially over-earning, and that whilst mgmt were sticking to their views, it was clear things were running behind schedule.

We concluded that note by saying “the market downgraded Orora on the day of the Saverglass acquisition, with the stock falling some 20% to reflect the risks associated with buying an over-earning business at a time of high interest rates”.

That put ORA on a forward PE of ~12x, some 25% cheaper than the broader market, for a stock that should, over the long run, do quite well.

That view will be tested, today, with the downgrade becoming reality. ORA is one we are happy to bottom draw, the issues are (broadly speaking) short-enough term (a destocking cycle) that we can look through it, and the valuation supportive enough that we can likewise look through it.

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