包装业：预计经济增长将有所改善

1、PackagingExpect Improved Growth in 2019; Stocks Starting to Perform Better but Short Interest Remains ElevatedNorth America Equity Research18 January 2019After having lagged the market over the past two years, we think the outlook for the packaging stocks looks more positive heading into 2019 in ter

2、ms of both earnings growth and valuation. We think EPS growth for the packagers should modestly exceed that of the S&P 500 in 2019, with the packagers benefitting from the recovery of inflationary pressures seen in 2018 (e.g. freight, resins), acquisitions, and modest volume growth. Despite a solid

3、outlook for the packagers and their defensive profile, short interest as a percentage of equity float for the packaging stocks in our coverage universe has recently ranged from 4.0-4.5%, a level last seen in the spring and early summer of 2008. Valuations also continue to look attractive, with the g

4、roup trading at a discount to its average forward multiples over the past three years. BLL, BERY, and CCK remain our top picks, as they should see strong EPS and FCF growth, while the market, in our view, is discounting too pessimistic an outlook for the benefits from recent acquisitions.Packaging s

5、tocks have underperformed the market over the past two years, performing better so far this year. The packaging stocks lagged the market in both 2017 (packagers up 11% vs. a 19% gain for the S&P 500) and 2018 (packagers down 14% vs. 6% decline in the S&P). We think this underperformance resulted fro

6、m multiple compression caused by a rotation out of packaging into sectors with more leverage to improvements in economic growth, pressures on earnings from raw materials and Fx, and concerns that extensive consolidation and high multiples are creating a more difficult acquisition environment. Howeve

7、r, the packaging stocks have performed better as of late and have performed roughly in line with the market this year (up 7% YTD vs. the S&Ps 5% gain).2019 looking to be a better year for EPS growth for the packagers. We think EPS growth for the packaging companies should modestly outperform the mar

8、ket in 2019. Specifically, we are forecasting 12% EPS growth for the stocks in our coverage universe, compared to consensus EPS growth for the S&P of 8%. This growth for the packagers should come from the recovery of inflationary pressures seen in 2018, acquisitions, and modest volume growth.Packagi

9、ngTyler J. Langton AC(1-212) 622-5234 HYPERLINK mailto:tyler.j.langton ty HYPERLINK mailto:ler.j.langton ler.j.langtonJ.P. Morgan Securities LLCEquity Ratings and Price TargetsCompanyTickerMkt Cap ($ mn)Price ($) Rat Curing PrevCur Price TargetEndPrev DateEnd DateArdagh GroupARD US2,705.6411.45Nn/c1

10、5.00Dec-1918.00Dec-19Ball CorporationBLL US17,310.6049.50OWn/c53.00Dec-19n/cn/cBerry GlobalBERY US6,853.4450.36OWn/c65.00Dec-1968.00Dec-19Crown HoldingsCCK US6,371.2347.60OWn/c65.00Dec-1968.00Dec-19Myers IndustriesMYE US584.7516.39Nn/c19.00Dec-1921.00Dec-19Owens-IllinoisOI US3,058.0518.99Nn/c23.00De

11、c-19n/cn/cSealed AirSEE US5,871.2837.16Nn/c41.00Dec-1942.00Dec-19SilganSLGN US2,892.8525.90UWn/c30.00Dec-19n/cn/cSource: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 17 Jan 19.See page 49 for analyst certification and important disclosures.J.P. Morgan does and se

12、eks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

13、 HYPERLINK / Tyler J. Langton (1-212) 622-5234 HYPERLINK mailto:tyler.j.langton ty HYPERLINK mailto:ler.j.langton ler.j.langtonNorth America Equity Research18 January 2019Freight pressures easing. Freight was a material pressure on the packaging companies earnings in 2018, but increases in both spot

14、 and contract freight rates have been easing since highs reached this past summer. Given that, we dont expect freight rates to be nearly as much of a y/y headwind in 2019 as they were in 2018. We also note that most of the packaging companies are more exposed to contract freight rates, which could b

15、e up modestly in 2019. However, we think PPI-based pass-throughs and other pricing actions should allow the packaging companies to have much more success in offsetting these costs.Resin prices have started to fall. After rising and remaining elevated for most of 2018, resin (polyethylene and polypro

16、pylene) prices have started to ease. The plastic packaging companies typically pass through resins, but do so with a lag. And, since resins, especially PP, were rising or elevated for most of 2018, the packaging companies were generally playing catch-up and seeing pressures on their earnings. Howeve

17、r, if resin prices continue to fall, the packaging companies could see a benefit in 2019 until the lags catch up and the companies have to pass along the lower prices.Short interest for group at levels not seen since spring/summer 2008. Short interest as a percentage of equity float for the packagin

18、g stocks in our coverage universe has recently ranged from 4.0-4.5%, a level last seen in the spring and early summer of 2008. CCK and SEE currently have the highest short interest levels, with CCK at 9.4% vs. its historical average since 2005 of 2.1% and SEE at 6.4% vs. its historical average since

19、 2005 of 3.2%.Valuation continues to look attractive. The packaging group has traded at an average forward EV/EBITDA multiple of roughly 9.2x and a 0.9x discount to the S&P 500 over the past three years. The packaging group is now trading at roughly an 8.6x EV/EBITDA multiple and its discount to the

20、 market is currently at about 1.0 x. On a forward FCF yield basis, after having fallen to below 6.5% in the summer of 2017, the packagers are now trading at a forward FCF yield of 8.3%.2019 OutlookAfter having lagged the market over the past two years, we think the outlook for the packaging stocks l

21、ooks more positive heading into 2019 in terms of both earnings growth and valuation. We think EPS growth for the packagers should modestly exceed that of the S&P 500 in 2019, with the packagers benefitting from the recovery of inflationary pressures seen in 2018 (e.g. freight, resins), acquisitions,

22、 and modest volume growth. Despite a solid outlook for the packagers and their defensive profile, short interest as a percentage of equity float for the packaging stocks in our coverage universe has recently ranged from 4.0-4.5%, a level last seen in the spring and early summer of 2008. Valuations a

23、lso continue to look attractive, with the group trading at a discount to its average forward multiples over the past three years. BLL, BERY, and CCK remain our top picks, as they should see strong EPS and FCF growth, while the market, in our view, is discounting too pessimistic an outlook for the be

24、nefits from recent acquisitions.Packaging stocks have underperformed the market over the past 2 years.After having generally performed in line with the market from 2014-206, the packaging stocks lagged the market in both 2017 (packagers up 11% vs. a 19% gain for the S&P 500) and 2018 (packagers down

25、 14% vs. 6% decline in the S&P). We think this underperformance resulted from multiple compression caused by a rotation out of packaging into sectors with more leverage to improvements in economic growth, pressures on earnings from raw materials and Fx, and concerns that extensive consolidation and

26、high multiples are creating a more difficult acquisition environment. However, the packaging stocks have performed better as of late and have performed roughly in line with the market this year (up 7% YTD vs. the S&Ps 5% gain).which has only occurred once before since 2000We also note that the packa

27、ging group has only underperformed the market for two consecutive years once before in 2011 and 2012, when the packagers lagged the market by 7% and 8%, respectively.Figure 1: Packaging vs S&P 500 Stock Price PerformanceSource: Company reports, Bloomberg and J.P. Morgan estimates.Figure 2: Packagers

28、 EPS growth should just slightly lag the market in 2018, but stocks have underperformed the market by greatest amount since at least2005Source: Company reports, Bloomberg and J.P. Morgan estimates.2019 looks to be a better year for EPS growth relative to the marketThe packaging group should post sol

29、id EPS growth in 2018, with our estimate at 18% y/y growth for the stocks in our coverage universe. However, this forecast is still below the consensus EPS growth forecast for the S&P of roughly 23%. For 2019, however, we think EPS growth for the packaging companies should modestly outperform the ma

30、rket. Specifically, we are forecasting 12% EPS growth for the stocks in our coverage universe, compared to consensus EPS growth for the S&P of 8%. As detailed below, this growth for the packagers should come from the recovery of inflationary pressures seen in 2018, acquisitions, and modest volume gr

31、owth.Figure 3: Packagers Should See Solid EPS and FCF Growth in 2018 and 2019Y/Y EPS Growth20018E2019EY/Y FCF Growth20018E2019EARD-9%4%-24%14%BLL7%29%-13%28%BERY8%13%5%6%CCK29%12%37%27%MYE44%12%24%-13%OI4%9%-8%21%SEE34%14%52%3%SLGN26%6%28%-9%Packaging Avg.18%12%13%10%SPX23%8%Source: Company reports

32、and J.P. Morgan estimates.Packagers growth should be driven by cost recovery, acquisitions and modest volume gainsWhile acquisitions were the largest driver of EBIT growth for the packaging companies from 2016-2018E, we are forecasting the growth to be more balanced in 2019. The recovery of inflatio

33、nary pressures not fully passed through in 2018 should be the largest driver of growth, while acquisitions and volume gains should be modest contributors as well.Figure 4: Acquisitions Should Be the Largest Driver of This Growthy/y growth20142015201620172018E2019ERevenue Growth2.4%-4.5%8.1%11.4%11.5

34、%0.9%Volume/mix0.8%-0.1%0.1%1.3%0.0%0.5%Price/pass-throughs0.9%-0.5%-1.5%1.0%2.9%0.0%Acquisitions1.9%2.0%12.0%9.0%5.3%1.7%Fx-1.2%-5.9%-2.5%0.2%1.1%-1.0%EBIT %10.6%10.9%11.5%11.7%11.4%12.2%EBIT Growth5.5%-1.0%20.8%14.7%9.0%8.2%Volume/mix0.9%-0.8%0.4%2.5%0.1%2.0%Net price/cost spread4.1%5.0%7.0%2.4%1.

35、6%5.9%Acquisitions2.2%2.7%16.6%9.6%6.8%2.2%Fx-1.6%-7.9%-3.2%0.2%1.2%-1.3%Source: Company reports and J.P. Morgan estimates.Total Company Volume Beverage can volumes are rebounding, which is benefitting BLL and CCKAs shown below, volume growth for the packaging companies in our coverage universe has

36、averaged about 1% over the past couple of years, and we expect a similar trend in 2019. CCK and BLL have seen some of the strongest growth rates more recently due to the strength of beverage can volumes on a global basis and their various expansion projects. SEEs growth has decelerated due to toughe

37、r comps from 2017 and declines in its Product Care segments utility business. Starting in 3Q17, MYEs Material Handling segment received a boost from a cyclical rebound in its agriculture end market and strong demand from the RV market, but volumes were flat in 3Q18 due to tough comps from its agricu

38、lture and consumer markets and declining demand from the RV market. ARDs volumes have benefitted from strength in its beverage can businesses and U.S. food can business, which have been partially offset by weakness in its U.S. glass business. After several quarters of flattish volumes, OIs volumes h

39、ave declined the past two quarters, with the impacts of the weaker grape harvest on wine volumes in Europe and a delay in the ramp ofnew business in the U.S. expected to weigh on volumes in 2H18. BERYs volumes have continued to see low-single-digit declines due to weakness from baby care in HH&S and

40、 rationalizations and then material qualifications in EM, while Consumer has seen a rebound from its new drink cup product. SLGN has seen the weakest volumes over the past two quarters due to tough comps in its Closures segment and weaker food can volumes, due in part to some more one-time events.Fi

41、gure 5: Total Company Volumesy/y growthSource: Company reports and J.P. Morgan estimates.Figure 6: Total Company VolumesTotal Volumes1Q162Q163Q164Q161Q172Q173Q174Q171Q182Q183Q18Avg.y/y growthARDn/an/an/an/a3%-1%1%-1%3%1%1%1%BERY1%-2%-2%0%-1%-4%-3%-1%-2%-1%-2%-2%BLL0%2%1%1%1%1%2%1%3%1%4%2%CCK1%2%1%1%

42、3%3%4%6%5%4%1%3%MYE3%-10%-2%-3%-7%2%14%15%14%4%0%3%OI0%0%-2%0%2%-2%0%0%0%-1%-2%-1%SEE1%1%0%1%4%4%5%5%2%1%1%2%SLGN2%-1%0%1%0%0%-4%-1%-1%-5%-3%-1%Average1%-1%-1%0%1%0%2%3%3%1%0%1%Average ex. MYE1%0%0%1%2%0%0%1%2%0%0%1%Source: Company reports and J.P. Morgan estimates.Freight was a material headwind in

43、 2018As shown below, freight was a material pressure on the packaging companies earnings in 2018. In many cases, while the packagers are able to pass through various main raw material costs, their contracts either dont include freight costs, or items like freight were included in a more general PPI

44、index, which didnt capture the meaningful increases in freight costs.Figure 7: Impact of Higher Freight CostsY/Y change$ in millions1Q182Q183Q184Q18FY 2018ARD201510752BERY2020203393BLL67151240CCK55131235MYE11114OI483116SEENANANANANASLGN244212Source: Company reports and J.P. Morgan estimates.ARD Elev

45、ated freight costs negatively impacted ARDs 1H18 results by $35mm and 3Q18s by $10mm, with about 2/3 in Glass North America and 1/3 in Metal Americas. For Q4, on a y/y basis, we expect the pressure to have eased slightly given easier comps and as 4Q has lower seasonal shipments.BERY BERYs FY 2018 (y

46、ear end 9/30/2018) was negatively impacted by a roughly $100mm under recovery of higher costs, including freight, resins, and other raw materials. In FY 2019, BERY expects to recover roughly half of these costs, with roughly half of this recovery from contractual pass-throughs and the other half fro

47、m negotiated price increases.BLL In BLLs North Americas Beverage segment, freight was a $7mm headwind in Q2 with $2-3mm self-induced from the start-up of Goodyear, and we estimate higher freight costs had a slightly lower impact in 1Q18. However, freight costs were a $15mm headwind in Q3 (with a por

48、tion also self-induced from the Goodyear startup), and we estimate that freight costs were an additional headwind of around$12mm in Q4, bringing the total headwind for 2018 to roughly $40mm.CCK We estimate that higher freight costs in CCKs Americas Beverage segment and North America food can busines

49、s could weigh on the companys earnings by$30-40mm, with more being felt in the 2H. Some of this pressure is from higher freight rates as well as higher costs associated with CCKs oversold position in North America beverage cans and the added expense of moving extra cans around higher rates. CCKs cos

50、ts in Americas Beverage were also impacted by the costs of having to buy extra cans from its competitors to meet demand from its customers.MYE The company has seen higher freight costs, but has been much less impacted than the other packaging companies in our universe, as freight is a much smaller e

51、xpense.OI Higher freight and diesel costs in OIs North America business are expected to weigh on the companys 2018E EPS by about $0.07, or roughly $12mm post-tax and$16mm pre-tax. However, the net impact of higher freight rates in the 2H should be about one-third of 1H levels.SEE SEE has not broken

52、out the impact of higher freight costs this year. After seeing a negative mix and price/cost spread in 1Q18, SEE posted a positive spread in 2Q18 and 3Q18, and we think this continued in 4Q18.SLGN Through 3Q18, higher freight costs have had a roughly $10mm negative impact on Silgans earnings. We thi

53、nk the y/y increase impact was about the same in 3Q18 but should ease in 4Q18.Both spot and contract freight rates are easing, expect much less y/y pressure in 2019As shown in HYPERLINK l _bookmark0 Figure 8 and HYPERLINK l _bookmark1 Figure 9 below, increases in both spot and contract freight rates

54、 have been easing since highs reached this past summer. Given that, we dont expect freight rates to be nearly as much of a y/y headwind in 2019 as they were in 2018. We also note that most of the packaging companies are more exposed to contract freight rates, which could be up modestly in 2019. Howe

55、ver, we think PPI- based pass-throughs and other pricing actions should allow the packaging companies to have much more success in offsetting these costs.Y/Y Increase in Spot Freight Rates1Q18 = 33%2Q18 = 25%3Q18 = 8%4Q18 = -5%1Q19 = -8%2Q19 = -13%3Q19 = -7%4Q19 = -1%Note: 1Q19-4Q19 y/y estimates ar

56、e based on current freight rates holding constant through 4Q19.Source: Bloomberg and J.P. Morgan estimates.Figure 8: Spot Freight RatesDry Van TL Sport RateSource: Bloomberg.Figure 9: Contract Freight RatesContract Freight Rate Y/Y ChangeSource: Bloomberg.Resin prices have started to easeAfter risin

57、g and remaining elevated for most of 2018, resin (polyethylene and polypropylene) prices have started to ease, as shown below. The plastic packaging companies typically pass through resins, but do so with a lag. And, since resins, especially PP, were rising or elevated for most of 2018, the packagin

58、g companies were generally playing catch-up and seeing pressures on their earnings. However, if resin prices continue to fall, the packaging companies could see a benefit in 2019 until the lags catch up and the companies have to pass along the lower prices.Figure 10: HDPE PricesSource: Company repor

59、ts and J.P. Morgan estimates.Figure 11: PP PricesSource: Company reports and J.P. Morgan estimates.Currency Some pressure in 1H19The packaging companies earnings were also pressured by the strengthening of the dollar in the first half of 2018. So, while currency should still be a headwind for the co

60、mpanies on a y/y basis in 1H19 at current levels of the dollar, they should not be a large headwind for the full year 2019 at current rates.Figure 12: 2017 - Current Average Exchange Rates20171H182H182018CurrentEUR1.131.211.151.181.14BRL3.193.433.883.643.75MXN18.9219.0719.3919.1819.01Source: Bloombe