Liams Last Post : Non Farm Numbers add to weakness, Abbey comments surprising , DCC ok and the weekend !!!

Good Afternoon ,

 

Well today felt decidedly like the old days with markets being quiet and investors at best apathethic if not downright plain nervous. Again volumes low , the US economic data being pored over and every entrail held up for all possible interpretations..

 

During the quiet Hiatus that was this morning , we debated here that there was only one thing for ertain and that the US Non Farm payroll number would not be anything like the consensus survey number of -175k, When the number came out at -263k job losses , there was really no surprise but given the discrepancy between expectations and reality , the markets immediately tanked and we sat back and wondered what next.   

 

Well , that next was a US market which did indeed open sharply lower but for the afternoon has been clawing back in the direction of flat.It is nervous though and could go anywhere… Crackberry addicts at the weekend get your Bloomberg's logged on for the closing half hour. Always fun on a Friday evening.

 

Ireland was quiet news wise , corporate news was focussed on the Ryanair Investor day in London where the message was about a business model evolving , a signal that the focus is on cash generation , that trading has not improved and much debate about the next ordered from Boeing. Feedback from some of the participants I spoke to was that it was a day of Michael O'Leary ranting , that the whole event could have been staged to get a message across to Boeing…but you never know. The market was unsure how to react too and the stock closed down -2%, a creditable performance on a weak day…

 

Abbey Plc gad an agm statement that on a less nervous day would have sent the Irish construction related stocks flying. The statement said that Trading in the first few months of this year has been steady. In particular excess inventory is gradually being cleared while in southern England good levels of business have been achieved in recent

weeks. In Ireland sales have been improving of late as some confidence returns to the market. Most fascinating was the comments that in Ireland that in some locations they may soon sell out and are keen to find further outlets particularly in the Dublin area. 

 

This is shockingly positive news and kind of got lost in the melee so I will repeat it again…..

 

'in Ireland that in some locations they may soon sell out and are keen to find further outlets particularly in the Dublin area'. 

 

In subsequent comments to the media the Chairman said the group was liquid and that the will be starting to buy sites in the UK soon and does not see risks of further writeoff in the UK and only a risk of a further modest writeoff in Ireland where it has written down the majority of its land bank to agricultural value. We again reiterate our view that the net asset value of the company will trough above €6 per share in this downturn (€6.12 at April'09 with c.€3 per share of cash value). While there are now a number of UK housebuilding companies with the capability to buy cheap land as it becomes available, we continue to expect that Abbey will be able to deploy its strong balance sheet into new land purchases over the coming 12-24 months and achieve attractive operating margins going forward as house prices recover. Has to be a BUY here ….

 

 The DCC acquisition announced yesterday was also very interesting. The acquisition of Bayford, a 468m litre oil distribution business in the north of England for consideration of €24.7m. Bayford Oil operates 60 road tankers out of 14 locations and generated operating profits of €3.9m in the year to June 2009 (operating margin of c.1.2%).adds c.12% to DCC's existing volumes of c.4.1bn litres and increases its market share in the UK oil distribution market from c.12% to c.13% . expect greater than 10% upside in DCC over the coming year based on central case SOTP forecast valuations. However, the real benefit will come through additional deals that the company does over the coming year as it deploys its strong balance sheet into deals similar to yesterdays acquisition. We expect further oil distribution bolt-on deals in the UK as well as entry into at least one other continental European oil distribution market over the next year (added to its entry into the Danish market announced earlier this year). Our Buy recommendation is based upon the company's ability to achieve significant value from bolt-on deals in the 18-24 month period after acquisition, as well the company's strong balance sheet that will enable it to complete attractive deals over the coming years.

 

Today is the day of the second Lisbon vote… the No camp had nothing credible to say.  The yes camp were at least united in their view that we need friends in Europe. Lets see how that goes…

 

At 5 pm  after a turbulent and disappointing start to the quarter ,the Dow Jones is down a mere -27 points  after the 200 point plus fall yesterday and the swing during the week from Mondays close of 9789 to today at 5pm in Europe of 9482 makes guessing the direction for the rest of the evening a mugs game..

 

Leinster vs Munster tomorrow night in the RDS… now that is what my weekend highlight will be… Clash of the Titans…and Leinster leaving Rob Kearney on the bench…

Leinster XV v Munster in the Magners League at the RDS, Saturday, 6.30pm:

15: Isa Nacewa, 14: Shane Horgan, 13: Brian O'Driscoll, 12: Gordon D'Arcy, 11: Luke Fitzgerald, 10: Jonathan Sexton, 9: Eoin Reddan, 1: Cian Healy, 2: John Fogarty, 3: Stan Wright, 4: Leo Cullen, 5: Nathan Hines, 6: Kevin McLaughlin,
7: Shane Jennings, 8: Jamie Heaslip   Replacements: 16: Bernard Jackman, 17: Mike Ross, 18: Malcolm O'Kelly, 19: Sean O'Brien, 20: Simon Keogh, 21: Fergus McFadden, 22: Rob Kearney

Munster squad v Leinster at the RDS, Saturday, 3 October at 6.30pm: K Earls; D Howlett, L Mafi, J de Villiers, D Hurley; R O'Gara capt, T O'Leary; M Horan, D Fogarty, J Hayes; D O'Callaghan, M O'Driscoll; D Leamy, N Ronan, N Williams. Replacements: J Flannery, T Buckley, P O'Connell, D Wallace, P Warwick, P Stringer, I Dowling.

 

Have a great weekend , I will be in the RDS ….

After that is managing my Under * soccer team to hopefully another famous victory tomorrow morning …..

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Have a good weekend….

 

Liam

 

 

 

 

 

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

www.merrion-capital.com

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