Good Afternoon ,
After Wall street found a floor on Friday , the European markets had a brighter if , up and down start to the day… Nervous that the Wall Street support might have been a false dawn , the markets took their time before moving higher today. European markets up about 0.5% with
Quiet on the news front today. Market still digesting the Ryanair investor day and concluding more and more that while there was stuff which was new , that on balance that the message was designed to show to Boeing that Ryanair have alternatives which might slow the rate of growth dramatically , may be very positive for shareholders in the short term as they will see a probability of higher yields and maybe even cash special dividends. Michael O'Leary had more comments today talking to Reuters where he said Ryanair could become the largest shareholder in Aer Lingus if Aer Lingus had a rights issue.
We saw the Homebond registration data for Spetember this afternoon…The absolute number of registrations in September was 212, down 67.1% yoy, compared with 245 registrations in August (-52.0% yoy) and 196 registrations in July (-59.3% yoy). The three month rolling measure (Jul-Sep), a better indicator as it smoothes out monthly volatility (particularly now as we are dealing with such small registration numbers), was down by 60.1% yoy, having been down by 55.7% yoy in August and -70.7% yoy in July. We will update further when Premier Guarantee releases its data over the coming days.
With Regard to Paddy Power , The Financial Times carried a story on Saturday covering the lack of draws that have occurred so far this season in the Premiership. The piece noted that only four draws had occurred at that stage, when statistically there is usually one draw in every four games. This lack of draws, combined with the string of wins by the top teams, had led the bookmakers to indicate privately that they may have to prepare the markets for the likelihood of missing their earnings targets when they provide updates over the coming weeks. Ladbrokes is due to issue a trading update on 12th November, while William Hill and Paddy Power have no scheduled date for a trading update. We note that since the publication of the piece, there were four further draws in the Premier League over the weekend. Run of results will always remain a short-term risk for a gambling business, however over the long-run results will tend to revert back to the mean (as is evident from this weekend's results). Specifically for Paddy Power, we note that while previously, when the company was of a smaller scale and less well diversified than it currently is, there was the potential for an adverse run of sporting results to have a meaningful impact on group profitability in a single year, we feel the business is now of such a scale and diversified nature that the impact from such event(s) should be limited. We feel investors should be aware of the potential short-term risks from run of results, but should gain comfort from long-run mean reversion trends
Markets up and wary…
Have a good evening
Liam
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Liam Boggan
Merrion Stockbrokers
Tel.: 353-1-2404171
Mob:353-87-2313505
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