Orora Limited (ORA)

Orora Limited is focused on fibre packaging and beverage packaging in Australia and packaging distribution in North America. ORA operations consist of 39 manufacturing plants and 85 distribution sites across seven countries. ORA have two main business units being: Australasia and North America.

Australasia business unit consists of four divisions: Beverage, Cartons and Bags, Paper and Recycling, and Fibre Packaging. The unit supplies various products to companies across Australia and New Zealand. These products include Bags, Closures, Fibre Packaging, Glass, Recycling, Beverage Cans, Fibre Displays, Folding Cartons and packaging solutions. Customers in this business unit include food beverage & industrial markets in Australia and New Zealand.

North America business unit consists of two divisions: Landsberg Packaging Distribution and MPP and CK. Landsberg offers a range of stock and custom packaging products including primary, secondary and tertiary options. MPP manufacturers a variety of custom and stock corrugated products. CK manufactures linerboard into corrugated sheets and offers product options designed to help solve packaging needs. Customers in this business unit include industrial, food, warehousing and shipping, technology and healthcare industries.

Orora is looking to expand its business in America through acquisitions of small player in a fragment market. They are looking invest $200 million per year on acquisitions which is a comfortable rate given their balance sheet. This is expected to increase earnings and improve profits; they have a forecast dividend of 4.2% for the 2016 year which will be partially franked given a gross return of 4.7% yield. Dividends are paid by cash flow; company has net tangible assets of $1 billion and is trading just over this level.

The company is currently trading around $2.21 our price target is $2.80 giving it an upside of around 20%. This is a boring solid business with good income and growth potential, would suit those investors with a long term view.