Liams Last Post : Kingspan tanks ahead of results , EU approves NAMA as banks test the euro level. Previews of next weeks results

Good Afternoon ,

 

Another week drags to a close , next week it is Irish reporting season in earnest and the markets have today given their verdict of fear ahead of the Kingspan news next Monday with the stock tumbling a scary -8.9%.  

 

The EU approved NAMA finally today so we wait for the Banks to get reporting and the first NAMA transfers so we can then focus for real on the recapitalisation process. Today was a landmark day as both AIB and Bank Of Ireland dipped below eur1,00 though Bank Of Ireland managed to close at exactly that price this afternoon.

 

Icon was the subject of debate yesterday , the stock fell -5% but today rallied by 2.3% , there seems to be no real rush to be in this one at this moment but the market seems happy to give them the benefit of the doubt for one more quarter.

 

Most markets opened higher and stayed higher throughout the day after the recovery in Wall Street last night. Ireland was marginally down at the close.

 

The currency markets are where it is all at with increasing pressure now on the UK which is losing ground to even the Euro this afternoon.

 

Here is a brief synopsis of our expectations for the key Irish results next week.

 

KINGSPAN

FY '09 Results Preview (due Monday, 1st March)

Expected FY 2009 EPS decline of 67% reflects the impact of a 33% sales decline, partly mitigated by cost

reduction. The sales decline reflects weaker demand, particularly in UK and Irish non-res construction,

and weaker stg£/€ translation. Outlook comments on volume trends and order intake will be of key

interest. Hold

 

ALLIED IRISH BANKS

2009 Results Preview (due Tuesday, March 2nd)

AIB's 2009 results are expected to include major losses. Key areas of interest will be commentary on EC

restructuring requirements, NAMA, capital initiatives and the continuing level of underlying profitability.

In addition to any update on NAMA discounts, non-NAMA credit quality will be closely watched.

Management's ability to outline a credible revitalisation plan will be of interest. HOLD

 

PADDY POWER

FY'09 Results Preview (Due Tuesday, 2nd March)

We look for Paddy Power to report FY operating profit of €64.7m (-14.6% yoy) and diluted EPS of 115.8c

(-15.9% yoy), impacted by the tough consumer environment and poor run of results in the second half.

Focus will be on outlook, with commentary on the online and Australian businesses of particular interest.

HOLD.

 

CRH

FY '09 Results Preview (due Tuesday, 2nd March)

Expected FY'09 EPS decline of 60% reflects a significant drop in demand and €200m of restructuring

costs. On outlook, we look for indications that sales have stabilised. We expect the positive impact from

US fiscal stimulus, cost savings and a modest improvement in US housing activity can outweigh further

weakening in Europe and US non-res in 2010.

 

IRISH LIFE AND PERMANENT

2009 Results Preview (due Wednesday, March 3rd)

IL&P's 2009 results will reflect the difficult economic and market conditions of the period. In the life

business, investment and experience variances are expected to generate a pre-tax loss, while

funding and credit costs result in a loss for the bank too. The key focus will be the capital position, arrears

trends and funding within the bank. The VIF securitisation and persistency trends are key subjects for the

life business.

 

FBD

Results preview (due Wednesday, March 3rd)

We expect weak 2009 results due to pressure on volumes and weather related claims. Focus will be on

the risks to forecasts from weak volumes and high claims, and possible write downs in the

investment portfolio and on property assets. FBD's balance sheet and cash generation remain strong.

Earnings are forecast to increase as volumes stabilise and pricing improves. Reiterate BUY

 

GRAFTON

FY '09 Results Preview (due Thursday, 4th March)

The expected 82% fall in EPS in 2009 reflects margin pressure in both UK and Ireland from significant LFL

sales declines: expected to be -13% yoy in the UK and -34% yoy in Ireland. We expect a full-year result

of a little over breakeven, with a moderation in the rate of sales decline (easier base) and a greater

impact from cost cutting in H2.

 

Have a good evening and  great weekend sports fans …Ireland vs England looks more mouth watering than France vs Wales…

 

Ireland at evens ? looks like a good bet.

 

Liam

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

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.

 

 

 

 

Liams Last Post : Greeks worries abound , RBS a bright spot , ICON disappoints.

Good Afternoon,

 

Hard to write about falling markets….a story of a weak opening , rising optimism markets making it into positive territory only to give it all away in the afternoon. European markets -1.85% , London -1.2% , USA -1.7% and Ireland -1.4%.

 

Its all about the Greeks…and the spread of contagion worries…across all markets.

 

RBS was the bright spot today with teir clear message that the worst is behind them. Ulster Bank even took a writeback of provisions against Irish Mortgages which was surprising. RBS was up 6% today.

 

ICON reported today , a mixed bag really. The Q4 numbers a tad better than expected , the Book to Bill ratio at 1.0x compares not favourably with Covance and Parexel which had 1.4x and 1.3x  so below peers, Margin guidance lower due to management investing in their business results in guidance for earnings being presented with a nice wide spread , the top of which is below the current consensus figure. This was sufficient to trigger a -6% sell off of ICON.  If the market can be really convinced that the investment which will drive the margin decline is really about future growth the stock should really be bought but there is a nagging doubt that the investment is in someway connected to the FDA letter and their response to it.  Whatever the reason , the market is taking the simple view that regardless of the revenue guidance , earnings guidance is below expectations and this is pushing the stock lower/

 

Have a good evening

 

Liam

 

 

 

 

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

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.

 

 

 

 

Liams Last Post : Ireland misses the boat as afternoon rally moves markets

Good Afternoon,

 

It was a miserable day in Dublin and regardless of the tone which improved internationally during the day , sentiment in Ireland never got any better.

 

It was a quiet day for corporate newsflow , we had pleasing Kerry figures yesterday and a management telling a very confident story guiding double digit growth again. Kerry was up 1% today , I believe that this management team were so confident with their guidance that there has to be some scope for upside surprise but it is early days to get overly optimistic,

 

Travis Perkins ended the day down -5.5% but the stock revered from its lows which had the stock down nearly double this amount.  The cautious tone of the statement was striking and punctured any remaining optimism about a recovery in the UK . It did say though that the market had stabilised. The ripple effect hit the Irish companies such as CRH -1.3% , Grafton -4% and Kingspan -3.6%.

 

The Financials were hit again on no specific news , the uk financials were up +3% and the European financials were also up.

 

The Strikes in Greece were a highlight on TV today , the Greek police seen firing teargas certainly does not help sentiment or suggest that Greece will find it easy to get away the much talked about Bond fund raisings…

 

Tomorrow ICON is due to release Q4 and FY earnings on Thursday 25th February 2010. We are forecasting Q4 revenue of $224.5m (consensus $225.3m), an operating margin of 13.4% and adjusted EPS of 39.4c (consensus 38c). Focus will be on new business wins and the book-to-bill. The market is factoring some level of improvement from the Q3 new business result and we would see anything above the 1.10x level as encouraging signs that the large level of RFPs reported at Q3 is starting to be converted to contract wins. FY2010 guidance will be provided for the first time. Fallout from, and the company's response to, the recently received FDA letter will also be of interest.

Have a good evening.

 

Liam

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

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.

 

 

 

 

Liams Last post : Tiger triggers rally after discount window scare..

Good Afternoon ,

 

Today was all about Tiger Woods....well he brought markets to a standstill this afternoon, our dealing room hushed to hear his speech , there was a market in the number of times he would say sorry. Five was the market, I regret now not taking part as I thought i would sell five and I was right , Three times was the score. The Dow Jones rallied after  the Tiger speech and moved into positive territory for the day…

 

The day started off very nervously after the FED raised the discount rate. This is essentially a technical move but it does represent the first step in the FED moving towards exiting the emergency accommodative stance to liquidity. It is also designed to force the Banks to actually source funds in the market and to get back to lending rather than riding the yield curve. 

 

It was apparent early that whil markets were down , there was no panic and indeed some buying began to emerge and quickly markets bounced higher. There was the usual bout of pre lunch nerves ahead of the USA waking up but when the US cam on stream in the pre market it was obvious that the markets would continue to rebound. 

 

In Ireland there was another dearth of news so the market tracked international trends. Irish Life continued to benefit from the takeover speculation started a few days ago.  CRH was weaker though it was being impacted by the negative reaction to the Lafarge numbers. I would expect to see some switching into CRH now as the Dollar Euro is a strong positive or CRH. 

 

The end of a pretty boring week...ICON and Kerry have results next week... Kerry is the big consensus call in the market as everyone loves it. Lets see if there is any evidence of the 'Go to market' strategy delivering in a substantive way. And ICON will give guidance for 2010 with their numbers and would expect to see ICON report a higher level of business wins in line with their peers who have just reported.

 

Have a good weekend

 

Liam

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

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.

 

 

 

 

Liams Last Post : Markets continue to rally, European earings season ok , Irish Life rallies on bid rumours

Good Afternoon ,

 

Markets continue to be put the Greece fears into the background and had another good day though on light volumes. Long only institutional activity is particularly quiet across the board and it is worrying. 

 

Not much corporate news in Ireland today , there was some newspaper articles about NAMA and suggesting that the First loans will be ready to be transferred to NAMA by February 26th. Some financial institutions seemed to be reckless in the extreme with rumours of Irish Nationwide rumoured to be about to receive haircuts of up to 50%.  If the overall discount for the sector remains at about 30% , this could be positive for Bank of Ireland. The valuations of the rump (Irish Operations) of AIB is now below the levels that it bottomed previously at in February 2009 so the market is not exactly rushing to come to any optimistic views...

 

The defensive food stock names in Ireland were the underperformers today as attention swung back to the cyclicals. 

 

My friends in Kepler equities commented on 37 European companies today and of those comments 31 were positive comments which gives a good indication of how the underlying company newsflow is positive as we get into the earnings reporting season. 

 

The Greek Government is rumoured to be about to try and tap the markets maybe as soon as next week.  March 1th is the key date for the markets as it is the date by which the Greek Government reports to the EU on its plans for getting the economy into shape.  I suspect that as we get closer to this date the volatility will increase again.

 

Irish Life was up by 4.7% today after a story in the Daily Telegraph sugested that the Resolution group may be looking at Irish Life. The story pooh poohed the rumours but Resolution may be interested afte rall the group is trading at a very large discount to our estimate of the value. Lets watch and wait.

 

Origin started to move belatedly today after a few days of strong performance by K&S an the fertiliser companies on expectations of higher fertiliser prices and sector consolidation.

 

 

At 5pm , the Dow Jones is up +0.17% , the Eurostxx50 is up +0.58% , the FTSE is up +0.9% and Ireland was up +0.6%

 

Have a good evening.

 

Liam

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

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.

 

 

 

 

Liams Last Post : CDS spreads come in , markes up , trading opportunities for the nimble .... ??

Good Afternoon ,

 

Markets in brighter form this afternoon after a better start this morning which was helped by the decent rally in the USA last night.

 

CDS spreads have been falling sharply in Greece and across the so called PIGS countries.  Technically the markets look finely balanced , the financials have ad a torrid time though the likes of BNP Paribas followed a trend in beating numbers today. Deutsche Boerse also pleased the market but the stock is badly beaten up at these levels so a rally comes as a welcome relief. 

 

I rushed to my desk clutching a coffee this morning at 6.45 to await the Bank of Ireland interim management statement. Instead of an IMS we got news that Bank of Ireland was going to change their fiscal year. A big step which brings them into line with their peers. The news was definitely an anti climax today. Ostensibly Bank of Ireland want to not be in close period when they get news from the EU re the business plan or news re NAMA and most importantly re a funding which has been much rumoured over the past week.

 

Volumes were light today , Portfolio managers wondering what to do , no one with bright ideas.

 

Ireland hit an interesting point on the house building side today with the news Premier Guarantee who released its registration data for January. This structural insurance data, coupled with Homebond's data (due for release in the next few days), is a proxy for house-starts in Ireland. Homebond traditionally accounts for circa 75% of registration data, with Premier Guarantee accounting for circa 25%, although the monthly breakdown between the two has been more erratic of late due to the size of the numbers being reported. There were zero registrations with Premier Guarantee in January.  

 

There as some supportive news for Norkom as NICE Systems, the owner of Actimize, which is Norkom's closest peer, issued Q4 and FY 2009 results. The company stated that the fourth quarter bookings and backlog were both record highs (although it is unclear how much of that was organic, with a number of acquisitions made by the company through 2009), although the company did note strong bookings across "almost all business and regions".  Norkonm was up +0.65% on a whopping 32000 share volumes…

 

I spent the day looking at individual stocks, and wondering about markets  Lots of stocks at critical leels , some have dropped a long way and look fundamentally cheap but the market is so caught up in trying to see what happens in Europe with the Greeks that no one is rushing to take big positions on the long or short side right now.

 

I think there are trading opportunities here for the nimble...I think tha Grafton may be a trade , that Smurfit might bounce from here to name but two..

 

Have a good evening

 

Liam

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

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.

 

 

 

 

Liams Last Post : macro concerns dominate but at least it is the weekend.

Good Afternoon

 

I hate to say it but I get the impression that the markets are now doing an impression of the last quarter of 2008. By that I mean that a wide variety of stocks look cheap and indeed the trend has been for earnings upgrades but the macro overlay has all but eliminated all short term confidence on the buy side  Every rally is being sold , indeed the rallies such as they are proving to be as short lived as they were in the bad old days…but everyone takes comfort from the rallies only to see stocks slide without any news as the day progresses.

 

Economic indicators were mixed today with US retails sales coming in higher but consumer sentiment measure took a dive. The Michigan Surveys of Consumers said its preliminary index of sentiment for February was 73.7, down from 74.4 in late January but up from 56.3 a year ago. The February figure was below consensus expectations.

 

Markets reacted initially positively today to the strong rally in the US overnight but the rally soon gave way with Financials falling quickly. The positive news from Bank of Ireland who achieved a capital gain of c. €405m.from the bond exchange was soon lost in the general sell off.   On a Pro-forma, this equity accretion would have increased the equity tier 1 ratio at end September 2009 to 7.0% from the 6.6% reported at the time. Merrion estimates assume that, before this gain, Bank of Ireland needed to raise €2.8B of incremental equity capital to reach an 8% equity tier I ratio at end F2011 post NAMA transfers. Obviously this number is reduced pro rate by the success of the bond offering so it should have been received well.

 

 The other comments which were widely reported on from the Head of the NTMA about the NAMA transfer process being on track were also of no support to the Irish banks.

 

Irish Life was very weak today on no particular news but we suspect that the sovereign debt worries are causing heightened concerns re increases in wholesale funding costs for banks and this would be a big negative for Irish Life as one of their major weaknesses is their over reliance on wholesale funding. The re-structuring of Irish Life to prepare the way for 'solving this problem by a corporate action to either inject the Permanent TSB in to the about to be created third force or to re capitalise the bank would have go a long way to addressing these issues if and when these options are executed.

 

The UK construction and builders merchanting stocks had a tough day with Travis Perkins falling by -2.7% and SIG also by -2.25% , Grafton was 'only 'down today by -0.8% but it has already been a huge underperformer relative to its peers.

 

CRH is in 'Back up the truck' territory in terms of valuations and the dollar strength vs the Euro could boost earnings by more than 2.5% fro our forecasts.

 

Smurfit is the classic stock at this point. Earnings look solid, the bias to forecasts is up and possibly significantly if the price increases announced for February are successfully implemented. Putting the potential new forecasts on Mid cycle earnings multiples suggests a price target between eur8.00 and eur10.00 per share . However in this environment the attempt by the stock to continue to rally was met by profit taking as it is one of the best performing stocks from its lows… where it got below eur1.00

 

And so the macro worries dominate sentiment ,  and Dubai reared its head today with the CDS spread jumping on concerns about the lack of a plan from them..

 

Oh Well , at least it is the weekend… and Kids mid term…

 

Hope Ireland beat France and kick off the next celtic tiger rally…

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

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.

 

 

 

 

Liams Last Post : Greek rumours spark rally, Honahan triggers short rally in banks, United Drug ok , Martin Marietta and Biogen good numbers.

Good Afternoon ,

 

Today markets rallied on rumours of a bailout deal being arranged for Greece.  It all centred on the story that ECB Chief Jean Claude Trichet is returning to Europe from meetings in Australia a day early.

 

The Irish Financials were positively impacted for a while this morning before resuming their downward slide by comments from our own Central bank Governor Patrick Honahan who said that Irish economic policy measures were appropriate and that market concerns re the banks re-capitalisation would be assuaged once the NAMA loan transfer process got under way formally. He did say that that the Irish state would increase its ownership of the Banks but that the overall cost would be manageable. This was initially reassuring but the negative sentient returned with the news that Halifax is to close its Irish retail operation with the loss of 75o jobs.

 

 United Drug has an Interim management statement this morning which was positive and the the stock does look cheap at this point with improving fundamentals and a better all around performance. Our forecasts are above consensus but we feel that we are being conservative and so there is scope for upside momentum when the consensus numbers rise towards our forecasts. It looks like way past the nadir for earnings and the Medco joint venture in the UK could become accretive earlier than assumed til now. The stock could get re-rated onvec it becomes clear that there is a resumption of growth as the stock is tradnig at relatively lowly valuations at this point (P?E approx 9x , Div Yield 3.5% and a free cash flow yield of about 10%)

 

Martin Marietta has reported Q4 numbers, with broadly similar themes to the results posted overnight by Vulcan Materials - Q4 earnings were short of expectations (greater than expected volume decline, and weak pricing in one division), with outlook comments that were cautiously upbeat in tone (due to many caveats).

Aggregates volumes in Q4 fell by 24% yoy (versus -22% in Q3 and compared to -23% in Q4 for Vulcan). The headline price move caught the eye, being a surprising fall of 1% (versus +1% in Q3 and compared to +5% for Vulcan in Q4). However, on closer examination the decline was driven by particularly weak pricing in one division (Southeast, which includes Florida) where average aggregates pricing in Q4 fell by 7%, while pricing in the other divisions rose by 3.4-3.8% (more comparable to Vulcan's +5%).  On the 2010 outlook, Martin Marietta expects stability in overall aggregates demand. It is positive on increased stimulus-related infrastructure demand, noting that in its top five states 80% of stimulus highway funds were obligated to specific projects in 2009, but only 15% was spent in 2009. Management was cautious on short-term non-stimulus highway spending pointing out that the re-authorisation of the six-year federal highway programme (the last one having expired at end Sep '09) is required to restore state-level confidence in highway spending, but it does not expect this until later this year. It anticipates a moderate increase in demand for aggregates from the residential segment, but off a historically low base. For private non-residential activity it expects a volume decline in 2010. Martin Marietta expects a negative mix impact on pricing (increased output going into infrastructure projects commands a lower price than its average 2009 output), and it notes that if this mix is greater than management currently assumes the downward mix impact could be greater than assumed in the formal price guidance. Overall, in the aggregates division in 2010 it is guiding increased sales and improved gross margins and profitability.

 

Elan partner Biogen Idec issued Q4 results ahead of the US open. Having already provided Tysabri patient numbers for the period of 48,200 (commercial); of interest in the numbers is the revenue generated from these patients. US in-market sales of $137m for the quarter were broadly in line with forecasts ($137.7m); whilst ROW sales of $159m were slightly behind our forecasts of $164.7m. The effect of this short fall in revenue will be c. -$3.9m from our forecast for Elan's revenue for the quarter of £304m. Tysabri remains the key growth driver for Biogen (as well as Elan) and the company as such remains committed to its future growth. The company provided guidance for 2010 including revenue growth expectations of "mid single digits" ahead of current Bloomberg consensus of 3.5% growth.

 

 At 5pm , the Euro has had a big spike vs the dollar closing at 1.3769 , the Dow Jones is +1.5% , the Eurostoxx is broadly flat , the FTSE closed +0.8%

 

Tomorrow , Smurfit Kappa reports against a background of increased uncertainty in the world but also a series of price increases for their grades of product which have been successful. Their comments on outlook will be eagerly watched .

 

 Have a good Evening

 

Liam

 

 

 

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

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.

 

 

 

 

Liams Last Post : The see Saw continues on a quiet low conviction day. Ryanair a short ?

Good Afternoon ,

 

The see saw continues...A very quiet day , reminiscent of the Ireland Italy rugby match on Saturday when players could be heard talking on the pitch...

 

the Bright bit of news today in Ireland was the release of the KBC /ESRI consumer confidence index which showed confidence measuring of 64.6 up form 53.3 in December but way way below the 14 year average of 92.4. The KBC economist though did strike a note of caution saying that there may be a further negative move when the post christmas bills arrive... It was likely that there would be a boost to consumer confidence in December post the budget but how long that lasts will be the key from here. 

 

There was some small contraction in the overall level of CDS spreads on Sovereign debt today with ireland at 164 , Spain now higher than Irelanf at 167 and Portugal now at 226 , down from 230 on friday and Greece comfortably above 400 at 407 but below the 428 level of Friday.

 

The sharp turnaround in the US on Friday night inspired the markets in Europe this morning but from 10am on the malaise set in and markets fell through their depresses friday closes but in the late afternoon markets did rise to above those levels to close in positive territory but way off the optimistic opening highs.

 

 You could still get killed day trading the Irish Financials , CRH at the 17.00 level looks good here but like all stocks , volumes and conviction levels are low.

 

I have seen doing some work on Ryanair and I am ever more inclined to agree that taking on the bullish consensus may be the play. 65% of passengers originate in economies where economic austerity measure are in place or are coming soon. Longer sector lengths have been acknowledged by Ryanair as a significant Cost head wind also Higher Fuel costs so to get to the consensus earnings number , the company has to increase average fares by 9% whilst simultaneously adding 12% to capacity...I just don't think the European peripheral economies are strong enough from a consumers perspective for Ryanair to achieve their targets. And as the markets continue to be volatile and with Ryanair being a strong relative performer , it does come into focus as an interesting counter consensus call. 

 

Tomorrow we have Greencore numbers to look forward to , will be interesting if the latent strength in the stock on Thursday an Friday last week was actually a good indicator of the results when they get released.  

 

Have a good evening ,

 

Liam

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

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.

 

 

 

 

Liams Last Post : Chaotic markets , Euro very weak , Dollar stocks should do well when markets settle.

Good Afternoon

 

Another chaotic day in the markets. The Dow Jones dipping below the 10,000 level gives an indication of the scale of the turmoil and nervousness.  The US unemployment data showed the unemployment rate falling but the absolute numbers unemployed up and significant negative revisions to the last month numbers suggests an erroneous data collection methodology an the market reacted negatively as the expectation was for a decrease in the job loss numbers.   

 

The Irish Financials throwing in weird and wonderful totally erratic performances up and down on a whim. Irish Life closed +2% after being down -4% at the opening , nearly a 10% trading range today.

 

What is for sure though is that there will be opportunities in abundance when calm returns , Many stocks have fallen very quickly to the bottom end of trading ranges and with the fundamentals still apparently improving this will prove interesting buy opportunities. Across Europe the patter is the same , I started of to look for stocks that have some performance left in them to see if there was an opportunity to construct a bear case and create some switching opportunities. There are a few of those. Ryanair is one , we have been cautious of this one and I fear being tagged a bear when the consensus ix stampeding with the bull argument however it is notable that Ryanair has such high exposure to Ireland , UK , Spain , Italy , exactly the economies where economic austerity measures are going to be felt the most in the next while so it is a legitimate question to ponder the challenge for Ryanair to grow fares and improve profits overall against the macro backdrop which is getting ever more challenging in their key markets and where they have double digit capacity additions coming on stream and higher fuel costs. The market got very bullish with their recent raised guidance ...I wonder...  have to say hand on heart that there might be a decent short trade in this one...with plenty of time to capture any special one off cash dividend before it actually gets paid...   

 

Dollar exposed stocks in Europe should do well also , The Euro is at the lowest level against the dollar since May 2005...CRH chould be one of the winners , Aryzta also and it should also benefit from the dollar and the weakness in Wheat prices.   

 

Greencore found favour today at the 1.35 level ahead of the numbers next week..... lets just say that I have been surprised that the Stock exchange never examines its share price action...it usually moves in the right direction ahead of time...and this is telling us the numbers will be strong. In the last two years the stock has perfectly anticipated both negative news as well as very good news ahead of time. Worth watching...

 

Smurfit did like I thought it would and did drop -6% at oe stage , recovered to close -3% today. I think I would like to buy smurfit at around 6.20 level.

 

Elan Tsyabri now has had 31 cases of PML recorded against it , the market is sort of taking this in its stride with the JC virus test expected to make risk assessment easier to do in the next few months.

 

In terms of research, it is quite quiet on the corporate news flow front , We trimmed our forecasts for United Drug to take account of the cuts in Drug prices in Ireland , this is well factored into market expectations though so ahead of the IMS next week , the stock rallied marginally against the trend.

 

So while equities perform nervously , the sovereign CDS spreads show the extent to which Greece and then Portuguese spreads have blown out with Spain now above Ireland . Ireland looks like it has persuaded the markets that the authorities here are serious...

 

Once again we depart wondering what the USA has in store for us this evening.

 

Have a good weekend ... 6 nations time again ... 

 

Liam

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

www.merrion-capital.com

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