DS Smith Plc (SMDS.L) | Investment Case

1. Company Snapshot

1.a. Company Description

DS Smith Plc provides packaging solutions, paper products, and recycling services worldwide.The company offers transit and transport, consumer, retail and shelf ready, online and e-retail, industrial, hazardous, multi-material, cushioning, and electrostatic discharge packaging products, as well as wrap arounds, trays, and bag-in-boxes; displays and promotional packaging products; corrugated pallets; Sheetfeeding products; packaging machine systems; and Sizzlepak, a stuffing material made of paper, folded in a zigzag shape, and cut into narrow strips, as well as provides outdoor advertising services.It also provides various recycling and waste management services, including total waste management, paper and cardboard recycling, confidential shredding, and coffee cups and plastics recycling, as well as equipment for the retail, manufacturing, print and publishing, paper mills, automotive, and public sectors.

In addition, the company offers recycled corrugated case materials, specialty papers, and kraft liners, as well as related technical and supply chain services.It provides its packaging solutions for the food and drink, consumer goods, industrial, e-commerce and e-retail, and converter industries.The company was formerly known as David S.

Smith (Holdings) PLC and changed its name to DS Smith Plc in 2001.DS Smith Plc was founded in 1940 and is headquartered in London, the United Kingdom.

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1.b. Last Insights on SMDS

Recent positive drivers behind DS Smith Plc's performance include a 2% increase in packaging volumes and a 3% interim dividend hike, as reported in the H1 2025 earnings call. The company's CEO, Andy Silvernail, also provided updates on a company rethink, involving site closures, corporate restructuring, and operational changes, which may lead to new box plant investments. Additionally, the company's strategic investments and market challenges have been addressed, positioning DS Smith for future growth.

1.c. Company Highlights

Last Price	582.5
Change Percentage	-1.02%
Open	588
Previous Close	588.5
Market Cap ( Millions)	8058
Volume	7051783
Year High	622
Year Low	312.33
M A 50	567.3
M A 200	471.7

FCF Yield	-2.82%
Dividend Yield	1.06%
ROE	9.59%
Debt / Equity	70.02%
Net Debt / EBIDTA	218.30%
Price To Book	0.51
Price Earnings Ratio	5.23
Price To FCF	-35.5
Price To sales	1.18
EV / EBITDA	9.95

2. Transcript Summary

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3. NewsRoom

Form 8.3 - Direct Line Insurance Group plc

Feb -03

Source:

Form 8.3 - SMDS LN Equity 28-January-25 Decrease in Traded position

Feb -03

Source:

International Paper closes acquisition of DS Smith

Feb -03

Source:

International Paper completes acquisition of DS Smith

Jan -31

Source:

International Paper Advancing Strategic Goals, Focusing on DS Smith Integration, RBC Says

Jan -31

Source:

Form 8.3 - Dowlais Group plc

Jan -31

Source:

International Paper Co (IP) Q4 2024 Earnings Call Highlights: Navigating Challenges and ...

Jan -31

Source:

Q4 2024 International Paper Co Earnings Call

Jan -31

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.76%)

6. Segments

Southern Europe

Expected Growth: 4.65%

Southern Europe's 4.65% growth in DS Smith Plc is driven by increasing e-commerce demand, urbanization, and a growing middle class. Additionally, the region's focus on sustainability and environmental concerns supports the adoption of recyclable packaging solutions, a key strength of DS Smith Plc.

Northern Europe

Expected Growth: 4.83%

Strong e-commerce demand, increasing online shopping penetration, and a growing need for sustainable packaging solutions drive DS Smith Plc's 4.83% growth in Northern Europe. Additionally, the region's focus on environmental sustainability and circular economy initiatives contribute to the company's growth, as customers seek eco-friendly packaging options.

Eastern Europe

Expected Growth: 4.83%

Eastern Europe's 4.83% growth for DS Smith Plc is driven by increasing e-commerce demand, urbanization, and a growing middle class. The region's strategic location and investments in infrastructure also support growth. Additionally, DS Smith's focus on sustainable packaging and innovative solutions resonates with environmentally conscious consumers, contributing to the segment's growth.

North America

Expected Growth: 4.83%

DS Smith Plc's 4.83% growth in North America is driven by increasing e-commerce demand, rising packaging needs in the food and beverage industry, and strategic acquisitions. Additionally, the company's focus on sustainability and innovative packaging solutions resonates with environmentally conscious consumers, contributing to its growth in the region.

7. Detailed Products

Packaging Solutions

Customized packaging solutions for various industries, including e-commerce, consumer goods, and industrial products

Paper Products

Range of paper-based products, including corrugated cardboard, paperboard, and specialty papers

Recycling Services

Collection, sorting, and processing of recyclable materials, including paper, cardboard, and plastics

Supply Cycle Management

End-to-end supply chain management solutions, including logistics, warehousing, and distribution

Plastic Packaging

Design and manufacture of plastic packaging solutions, including containers, bottles, and caps

8. DS Smith Plc's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for DS Smith Plc is medium due to the availability of alternative packaging solutions, but the company's focus on sustainable and innovative packaging reduces the likelihood of substitution.

Bargaining Power Of Customers

The bargaining power of customers is low due to the company's strong relationships with its customers and its ability to provide customized packaging solutions, reducing the customers' ability to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the company's dependence on a few large suppliers for raw materials, but the company's scale and global presence mitigate the suppliers' bargaining power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the packaging industry, including the need for significant capital investment and the complexity of the manufacturing process.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the packaging industry, with many established players competing for market share, but DS Smith Plc's focus on innovation and sustainability helps to differentiate it from its competitors.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	32.76%
Debt Cost	4.70%
Equity Weight	67.24%
Equity Cost	8.62%
WACC	7.34%
Leverage	48.73%

11. Quality Control: DS Smith Plc passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Vidrala

A-Score: 6.1/10

Value: 5.7

Growth: 7.4

Quality: 7.0

Yield: 3.8

Momentum: 3.0

Volatility: 9.7

1-Year Total Return ->

Viscofan

A-Score: 5.9/10

Value: 4.5

Growth: 5.1

Quality: 7.2

Yield: 7.5

Momentum: 3.0

Volatility: 8.3

1-Year Total Return ->

Verallia

A-Score: 5.9/10

Value: 6.5

Growth: 5.3

Quality: 3.8

Yield: 8.8

Momentum: 4.0

Volatility: 7.0

1-Year Total Return ->

DS Smith

A-Score: 5.7/10

Value: 8.3

Growth: 3.7

Quality: 3.8

Yield: 4.4

Momentum: 8.0

Volatility: 6.0

1-Year Total Return ->

Huhtamaki

A-Score: 5.4/10

Value: 6.4

Growth: 4.9

Quality: 5.4

Yield: 5.6

Momentum: 1.0

Volatility: 9.3

1-Year Total Return ->

Smurfit Kappa

A-Score: 3.3/10

Value: 3.3

Growth: 3.7

Quality: 3.0

Yield: 2.5

Momentum: 4.0

Volatility: 3.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

35.01%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.34%

DS Smith Plc - GB0008220112

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on SMDS

1.c. Company Highlights

Higher Yield

Fairly Valued

Stable Momentum

Average Yield

Lower Growth

Strong Momentum

Average Quality

Revenues Miss

Earnings Miss

Medium Volatility

Less Volatile

Average Growth

Cheaper

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.76%)

6. Segments

Southern Europe

Expected Growth: 4.65%

Northern Europe

Expected Growth: 4.83%

Eastern Europe

Expected Growth: 4.83%

North America

Expected Growth: 4.83%

7. Detailed Products

Packaging Solutions

Paper Products

Recycling Services

Supply Cycle Management

Plastic Packaging

8. DS Smith Plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: DS Smith Plc passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

5.82$

Current Price

5.83$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA