Liams Last Post : markets hang on, Elan rumours, Aer Lingus

Good Afternoon ,

The story of the day in Ireland erupted in the Afternoon with the rumour that Lundbeck is about to bid for Elan.The market believed this story and Elan share price rallied +15% . Lets see how this unfolds. Biogen
IDEC , Elan’s partner in Tsyabri held an analyst day yesterday where they held a separate session on the prospects for re-energising Tsyabri. The most interesting part of their presentation that I saw was the survey of Physician confidence in Tsyabri which had been growing steadily until the first case of PML post re-launch got stuffed as the second case came and then began to recover and the incidence the third case of PML had little influence on the recovery of the perception of the drug.

The Irish market was up again +0.42% , Europe +0.36% and London + 0.6% with Wall street +0.9% after the most remarkable last few minutes straight line rally as witnessed last night. Markets have been steady for a while now , we have been gettng supportive comments from governments and stmulus packages everywhere (except Ireland where the word hair shirt will be given a new meaning on April 7th) . It does look like we have been through the worst part of this market but the fear remains that this is just another bear market rally.

Late in the day , United Drug rallied +5% , C&C sparked into life and jumped +3.7% , Kerry +2.5% , Total produce fell -1.8% but its sister company rallied +4..76%

The financials had a quiet day , AIB down -1.5% , Bank of Ireland +6% , Irish life -3%

We published a note this afternoon making an explicit recommendation that Aer Lingus management take steps to cancel the long haul aircraft orders and conserve cash. The argument is potent that the management team act decisively to protect shareholder value and retain cash rather than deploy cash into assets which are unlikely to generate an acceptable return. Makes sense to me , there is significant value locked up in Aer Lingus but the management team are under pressure to prove that they are capable of unlocking value for their shareholders.

Ryanair for its part continues to find it hard to rally and remains at 2.80. INM also struggles at 16c as Denis O’Brien appeared on CNBC this morning but did not convince anyone that there is a solution to the debt roll overs imminent that will be friendly to current shareholders.

Irish GDP figure today were a bit shocking with 2008 GDP fell 2.3% in volume terms to €183.7bn while GNP declined 3.1%. For Q4, the decline was 7.5% y/y in GDP and 6.7% in GNP at constant prices. Q4 features include Consumer spending -4.% in volume terms, Capital Investment -30.6%, Exports -4.9% , Imports -10.4%, Industrial Output -12.5% (of which building & construction -24%) and Agriculture -5.4%.

Have a good evening.

Liam



___________________________________________

Liam Boggan

Merrion Stockbrokers

www.merrion-capital.com
Disclaimer www.merrion-capital.com/disclaimer.html
Merrion Stockbrokers Limited (registration no. 307878)
is a limited liability company whose registered office is at
Block C, The Sweepstakes Centre, Ballsbridge, Dublin 4, Ireland.