The broker notes China is now taxing plastic resins at 25% but this has not impacted on Amcor’s performance in China given resin prices fell, offsetting the tax. However, Amcor’s PE is now up to 17x which the broker sees as stretched, implying investors are paying for 13 years of earnings.
This might be sustainable, but the broker suggests restrictions against plastic production must soon come into being on a global environmental basis. Neutral and $14.90 target retained.
Sector: Materials.
Target price is $14.90.Current Price is $16.31. Difference: ($1.41) – (brackets indicate current price is over target). If AMC meets the Credit Suisse target it will return approximately -9% (excluding dividends, fees and charges – negative figures indicate an expected loss).
