Good Afternoon ,
Well Anthony Bolton called the return of the Bull Market again today but this time the market was in the mood to listen….
The markets were strong all day , amazingly the Eurostoxx600 index is heading for its largest ever monthly gain and has erased the year to date declines. The Eurostoxx index has climbed 14% in April. The clients I have met last week all had portfolios which they said were too defensive in nature and that they were looking for opportunities to move to a more aggressive posture. This is interesting as coupled with a clear lack of selling pressure there is only one way for the market to go. Anthony Bolton described his view in terms of there being a strong negative consensus and high cash positions as being the right ingredients to bet against the consensus. So typically the bull run does not suit many players and so the pressure mounts as the market continues to rally.
In Ireland today the INM’s results were the big news as was the news that they have not succeeded in re-financing the bond which is due for maturity on May 18th. We’ll be revising our earnings forecasts for 2009 down toward normalised EPS of 5.4c compared to 12.6c in 2008 At operating profit level, our prelim estimate is c. €194m compared to revised guidance of €200 to €230m.
The key concern remains the refinancing of the debt. Management indicated this morning that it is looking at a more comprehensive solution than just refinancing the €200m bond due in May. This is encouraging given significant maturities of bank lines in 2010. Management has called for a conference call with bondholders (of the €200m bond) tomorrow to discuss a standstill agreement. The company is conducting an auction of none core assets such as Verivox and Cashcade, the proceeds of which will be used to pay down debt. News flow on debt refinancing could be a positive catalyst for the share price. However, there is significant uncertainty re. the terms and what the company profile and outlook will be afterward.
Glanbia issued a downward revision to guidance for the full year from current consensus of 36-37cent to 30-32cent citing a further decline in global Ingredients markets and the impact this will have on the Irish Ingredients business. At the time of the company’s results the company had guided that it would breakeven in the current year in this division. However, further declines in commodity prices and the inability to pass through further input cost reductions to a farming sector already under pressure has meant that the division is likely to make a “significant” loss in the current year. The company also notes a significant decline in the profitability of its agribusiness division as a result of the reduction in farmers incomes in 2009. Our understanding is that performance in the other parts of the business is good with demand for product from the US Ingredients operations JV particularly strong (albeit at reduced prices), and the nutritionals businesses continuing to perform through the current downturn. Our forecast prior to this announcement was for EPS of 33.8cent for 2009.
The most interesting news of the afternoon though was the surprise announcement that AIB management team have succumbed to the government desire for change of management. The Chairman , CEO and FD all will retire. And presumably walk off into the sunset with their heads held high with nice pension packages. Good Luck to them.
At 5pm , as we end the month on a high note , Wall Street is up 0.75% , Europe was up 1.7% , the ISEQ was up again strongly driven by CRH , the ISEQ closed up +4.9% today and CRH was up +6.7% today.
Sunny evening , Mayday tomorrow .
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.
No comments:
Post a Comment