Liams LAst Post : The Day after NAMA and Bank of Ireland emerge best relative to AIB

Good Afternoon ,

 

Well the day after the Bank news and Bank of Ireland results and finally the banks have share prices that have diverged…

 

I was struck by the language used by the minister yesterday in his speech with clearly a warmer tone towards BOI than AIB which seem to have remained on the wrong side of the Government throughout the process.  I noted also that the AIB statement last night thanked the support of the taxpayer rather than the Minister duriog the crisis. The taxpaying customer of course got rewarded by AIB by them raising their variable mortgage rates so thanks indeed.

 

Bank of Ireland was the real winner with a big jump of 24% in the share price , though the market is beginning to focus on the mechanics of the capital raising by both parties and ther will be certainly opportunities to buy any of these stocks during the transactions.  BOI are understood to be awaiting news from the EU before proceeding with their transaction and AIB have a month to put a plan together but they were told by the minister that they would immediately start the process of selling their UK , Polish and US assets. This is not negotiable.

 

So after a year and a half od analysts speculating , in a very short few minutes the regulator gave us the workings for each institution of how much capital they need. Now it is for the Institutions themselves to assemble their investment case and win investor support.

 

FBD gave up a little bit f ground as the Quinn group issued their statement saying the regulator was wrong. I don't think the public is in the mood to give tarnished reputations the benefit of the doubt over this. FBD is already attractively priced but if the Quinn insurance group under effective state control becomes less price competitive this will be very beneficial for FBD.

 

Irish Life was a disappointing performer today up just under 4% , I know they have been signalling that they are in discussion with the regulator and that they are likely to have to raise about 1bn to bolster the balance sheet of the Permanent TSB which is about 15om more than we had modelled and of course he third fore was not mentioned last night. But there was nothing too negative for Irish life and as Sebastian has always pointed out any capital injection should be valued at the value of the monies injected so there is still a lot of upside to the fair value of Irish life even looking ahead to it post recapitalisation.

 

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 : Twas the day before NAMA , The Minister and the Regulator...

Good Afternoon ,

 

T'was the day before NAMA… Finance Minister, Financial Regulator and NAMA are to make statements on Tuesday afternoon to provide an update on NAMA discounts, outline bank recapitalisation needs and options, and potential State ownership levels. The media headlines suggesting that the numbers will be much bigger sent shock waves through the market and the banks fell sharply with AIB -19.5% and Bank of Ireland -10.5% with Irish Life -4.7% ,

 

The rumour mill is in full swing with rumour about AIB needing 7bn of capital. Our assumptions were that AIB needed 4.7bn of capital. At this point I don't think it is even useful to comment…better wait and see. This process has been played out in the media with the Sunday papers publishing a series of ever more worrying stories as the weeks have passed.  Tomorrow will reveal all. I can hardly wait…

 

Bank of ireland has postponed its results announcement to Wednesday.

 

Tomorrow Aer Lingus will compete with the Financials with its own results…

 

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 : up and down week delivers +1.5% performance across Europe , +2.6% in Ireland

Good Afternoon ,

 

At the end of an up and down sort of week where I detect signs of markets tiring after the recent rallies , the Euro Stoxx 50 index recorded a gain for the week of +1.5% . The best performing sectors were the consumer discretionary stocks which as a sector were up +2.5% , and within this the best performing individual sub sectors were auto components , Hotels , Media all up in excess of 3% with the balance namely speciality retail , Travel and Autos all up a more modest +1% ish on the week.

 

In Ireland, we had numbers from Independent News and Media which were ok and we subsequently upgraded our recommendation on the stock. This is a cyclical recovery punt rather than the best quality investment but there have always been times to make money by trading it and from here there is definitely the first signs of stability and the stock could possibly surprise on the upside with a potential re-rating or an earnings surprise.

 

The Irish Banks continue to be volatile as we get closer to announcements from them about their NAMA discounts and their plans to raise capital.

 

Aer Lingus like the rest of the sector bounced on mews about developments re open skies. The stock also reacted positively in anticipation of the results of a second ballot by cabin crew who had voted against the planned cost cutting and so were taking the opportunity to potentially revise their opinion in the light of the company proposal to make the entire 230 cabin crew redundant in the absence of agreement.

 

Paddy Power got squeezed up a couple of percent this week after the Cheltenham run was digested by the market.

 

Smurft came in for some selling pressure on fears about the rises in OCC prices but a number of European players announced further price increases and made clear intheir comments that the price increases would compensate for the OCC price rise

 

And eventually the pressure eased on Smurfit ad it bounced nicely.  Glanbia continued to perform after our upgrade on Wednesday and closed he week at the eur3.00 level , it looks overbought here and may  provide an opportunity to get out ahead of the co-op placing. Our 3.3o price target assumes all the components of the deal complete and as these have not been concluded there is an element of risk which is not negligible here.

 

ICG results were also pleasing this week with upgrades helping underpin the price and of course on Wednesday we saw Cider Duty being increased in the UK budget but by less than the market had feared so the stock rallied.

 

Next week we look forward to Aer Lingus results as well as Bank of Ireland results on Tuesday. It should be an interesting if short week with Good Friday looming.

 

Looking at the market , it does look a bit tired with stocks showing signs of rolling over a bit from here. From a trading perspective the pullback trade is probably the way to look at next week.

 

In the meantime , Have 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 : UK budget Cider duty increase sparls rallly in C&C , Glanbia takes off.

Good Afternoon ,

 

UK Budget was the key story of the day , the key feature from an Irish perspective was the increasing of cider and alcohol duties with Duty on cider to increase by 10% above inflation from Sunday but not as much as some had feared so the price of C&C reacted well closing +3.8%

 

INM reported results this morning which were in line with expectations , we met the company management for a sandwich at lunchtime and while they are decidedly circumspect about the prospects for the Irish business from here , it does look like they have come through the side of a harrowing re-financing episode and looking at the story from here , it is looking more and more interesting as one of the most geared recovery plays at this point.

 

Glanbia have been on the road telling their story about the upcoming prospective transaction to sell their Irish business of the Co-Op , Merrion published our views on the stock today also putting a 3.30 price target on the stock derived from a 12 x multiple on the earnings of the residual businesses. The stock rocketed today though and touched the Eur3.00 level before settling back at the 2.95 level with decent volume trading as investors get comfortable that the potential placing of approximately 37% of the company is an opportunity rather than a threat.

 

The Building materials stocks got hit today with UK broker downgrades.

 

Aer Lingus continues to reflect optimism that the Union members will reverse their original 'Turkeys voting for Christmas' original vote and vote in favour of the management cost cutting proposals. Stock is showing some signs of life and up from 60c two days ago to 64c now.  Only problem is that the Unions are so militant here that the outcome is far from clear cut.

 

 

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 : Its Monday , its subdued banks reflecting NAMA noises, Wolseley sets the tone for the construction stocks.

Good Afternoon ,

 

A day where the ISEQ reflected on the stories in the weekend press which yet again seemed to have well placed leaks about NAMA. This time suggesting that the initial NAMA discounts would be higher but that this would not necessarily be representative of the rest of the transfers, So we have no reason to change our forecasts which ar for 35% discounts for AIB loans and 28% average for bank o Ireland. The suggestion that Bank of Ireland might ultimately transfer less loans to NAMA did not seem to impact the share price.

 

Wolseley closed down -2% today after its interim results. In terms of read across for the Irish companies it said that RMI in the UK had improved slightly which is marginally positive for Grafton and it did note a pickup in residential activity in the US which has some positive potential implications for CRH but the comments on Commercial and Industrial markets in the US are negative for Kingspan. At the end of the day CRH had surrendered -1.4% after last weeks rally and Grafton was +2%  whereas Kingspan was down just over 0.6%.

 

Smurfit Kappa was up 0.7% today despite the increasing number of downgrades reflecting the spike in OCC prices for 2010. The big question is now whether the pricing momentum runs out of steam from hee. It looks finely balanced but the bears have not got it all their own way just yet…but the bulls are nervous…

 

UK budget on the 24^th will raise the annual excise duty fears re C&C so expect a somewhat nervous couple of days.

 

European markets Markets rallied in the afternoon taking their lead from the US. Still would not be surprised to see some element of a pullback aft her recent strength but I am not sure that the pull back will be significant.

 

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 : Paddys week and cheltenham comes to an end ... ok week for Ireland +1.6%

Good Afternoon ,

 

What an interesting week…

 

Cheltenham is a godsend for the bookies …. Patrick Kennedy and co will be grinning from ear to ear for the next while. They made much of their marketing with the money back special on Denguib which was a carefully opposed favourite and set them on their way insured to against disasters right from the off…However as the four days have unfolded there has been favourite after favourite which managed to get overturned culminating in the fall of Kauto star and the ultimate win of the Imperial Commander in the Gold Cup which sealed Cheltenham as one of the most successful race meetings in a while for the bookies.  Paddy Power share price has been a big winner in the last couple of days also , it was looking a tad lacklustre last week but put in a strong performance this week to breach the eur25 level in the aftermath of the God Cup after a bout of pre Cheltenham nerves which saw the stock close last Friday at 22.75 , +11% gain for the week. Think anyone would be happy with that. Winner all right.

 

We look ahead now to hearing from the Banks as they get informed about their NAMA haircuts…. BoI moved its fiscal year end to December from March. As a result, it is to report results for the nine months to the end of 2009, which implies revealing results for calendar Q4. A specific date is not yet confirmed, but the announcement is due before the end of March. The results are likely to be overshadowed by developments on EC restructuring requirements, NAMA details, and the recapitalisation process for the bank. EC feedback on restructuring plans is anticipated in the coming weeks. The Irish Finance Minister is reportedly expected to provide an update on the banking sector on March 25th.

 

Investors will be looking for an update on expected cumulative loan losses (prior guidance €6.9B before incremental NAMA discounts; our €8.2B cumulative loss forecast includes a 28% discount on €16B of NAMA loans). We expect the equity tier I capital ratio to have declined to 5.6% from 6.6% at September, reflecting losses for the period. A further decline to 5.1% is forecast for 2010.

 

Next week we also look forward to the Independent News & Media's 2009 results due Wednesday, March 24^th. The restructuring of INM's balance sheet was a major focus in 2009, with the rights issue, equity for debt swap and asset disposals. Year end net debt is forecast at €1,071m. A further €42m of non-core asset disposals has been conducted to date in 2010 (sale of 7.8% stake in Indian associate JPL). An announcement on the disposal of loss making UK titles is expected imminently. 2010 Debt/EBITDA (ex APN debt and EBITDA) is 5.4x on our forecasts; the disposal of INM's APN and JPL equity stakes at current market prices would reduce this to about 1.5x. Independent News & Media's 2009 are expected to be weak, reflecting the state of the underlying economies and advertising markets during the period. Investors will be looking for stability in the revenue and operating profit outlook, particularly in the Irish and UK businesses. These businesses should offer significant operating leverage to a cyclical recovery in advertising, assuming efficiency measures undertaken in the down cycle can be maintained. Our current forecast is for an increase in 2010 operating profit to €224m, primarily driven by APN.

 

Before Indos there will be results from ICG… which will report full year results on Tuesday, March 23rd. We expect EPS of 82.3c for the year. The

forecast earnings decline of 45% yoy represents a significant decrease. Full year revenue is expected to be €283m, a decline of 17.5% versus 2008. EBITDA is forecast to decline 21.2% yoy to €49m.  We are forecasting net debt at year end of €35.2m versus €48.7m at end December 2008 and

€48.5m at June 2009. At the end of September 2009, net debt was €30.0m. While we are forecasting a working capital outflow in the final quarter, our estimate on this front may prove to be too aggressive, resulting in a better net debt outcome. We expect the company to declare a

final dividend/redemption of €1.00 per share. In terms of 2010, the key issues will be the company's outlook for both the freight and tourism

market. In addition, any news on chartering renewals and also on competitor capacity is also of

interest

 

Sean Fitzpatrick was seen being collected from Bray Garda Station and driven away trying to look calm. Interesting that he was held for the full period and not getting any favours shown to him. But no sign of the Perp Walk just yet . No charges were pressed but a file will apparently be sent to the Department of Public Prosecutions so watch this space..

 

Aer Lingus said today that it would begin to implement the decision to layoff the 230 cabin crew in 22 days time. The share price remains stable at the 60c level.

 

Quadruple witching hour in the US today , with options expiry etc… anything could happen later…

 

DCC comes out of the Stoxx dividend index today , the stock looks like it has already factored the effect of this into the price and this could go better from Monday when it ceases to be an issue.

 

Tomorrow the conclusion of the six nations takes place with Ireland taking on Scotland and then Ireland relying on England to pull a rabbit out of the hat against France… markets have had a good last week with strong rallies all round , they look a tad tired now however so I would not be surprised to see a bit of profit taking next week.

 

In the meantime , 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 : Subdued markets , pull back brings stocks into attractive territory once again.

Good Afternoon

 

A quietly subdued day in the markets , time for a bit of a pause after a few days if strength , the Irish Financials continue to be a tad nervous , the media story about Irish Nationwide and the EBS having to both submit separate business plans to the EU appears to be about to delay any advancement of the notion of the creation of the third banking force. This news was not helpful to irish Life which seems to be attracted like a magnet to the Eur3,00 lelvel as an upper bound of its trading range.

 

The news that Sean Fitzpatrick has been arrested was greeted with nary a tear shed in Dublin. Financial irregularities was all the news said. I think the court of public opinion will be pleased to see some people being held to account for the debacle.

 

There was an interesting article in the New York Times on Ireland which suggested that that the lessons that the US could learn from Ireland is that the Banks which are prone to recklessness should be limited in size relative to the size of he economy and be forced to hold more capital. The article went on to basically suggest that while Ireland is the poster boy for good behaviour in response to the disaster that the policy measures undertaken by Ireland which are now seen as standard practice were not the only solution and that the state could have forced the Big Banks creditors and bond holders to have taken some of the pain instead of transferring the pain directly to the taxpayer.

 

Smurfit Kappa has come under pressure over recent days,  The huge rally in the price of OCC (Old Recycled Container Board ) has been seen negatively by markets. The issue is whether the price increases which have been announced recently will flow to the bottom line or to what extent they are offsetting the increased costs of OCC. Either way sentiment is fragile here now with downgrades from International as well as local brokers on the stock.

 

Paddy Power is having a seasonal outing as the marker realises his years Cheltenham is a bookies fest with a reall ppsitive run of results favouring the bookmakers all through the festival thus far.  Paddy Power closed +3.6% today.

 

Internationally the FEDEX numbers which were positive underlined a regaining in the US economy and news from Lloyds list suggested that Order books for new Cargo ships were up 870% in China in the first two months of the year.

 

Glanbia was remarkably strong today on decent volume suggesting that the Co-Op placing might find considerable appetite at these levels given the already attractive price of the stock.

 

A feature in the afternoon was the surrendering of some of yesterdays performance by the US and Irish construction stocks after the positive news of yesterday in relation to highway contract awards.

 

Total produce slipped back also towards pre results levels ,,, I am looking for an opportunity to get back into this one , I was surprised by the rn after the results as I thought there was nothing really special in it in terms of new news and certainly no transformational deal on the horizon but if the price eases back it could become attractive once again.

 

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 : Suddenly there appears to be silver lining in them there clouds...

Good Afternoon ,

Well it certainly feels like that …. First today we had Denguib finishing in 3^rd place in the Cheltenham opener. The fate of Denguib was a much publicised special on the part of Paddy Power who decided to take on the favourite and set the tome for their aggressive stance during Cheltenham. The short priced favourite failed to deliver and the paddy power promise to return all losing bets should he woin came to nought. There was a short lived but immediate +2% spike in the price of Paddy Power this afternoon. Don't Forget ,,,,I think these guys are smart and have a plan…still one of my favourite long term winner ideas albeit stuck in a range recently.

The Cue for the strength on the markets this  afternoon came with the news from S&P that thay have taken Greece of the negative watch list saying that the recent measures taken are sufficient. Given markets have been fixated with Greece , this can only be good news…

In Ireland the National Treasury Management Agency (NTMA) sold €1.5 billion of bonds , a 4.6%  2016 bond and a 4.5% 2020 bond in an auction today, The auction was part of the NTMA's €20 billion funding programme for 2010.Total bids for the issue were €4.915 billion, 3.3 times the amount on offer.
The 4.6 per cent treasury bond for 2016 was oversubscribed 4.5 times the amount allocated, while €1 billion of the 4.5 per cent bond for 2020 was issued, with bids of 2.6 times the allocated amount received. The 2016 bond was sold at an average yield of 3.479 per cent while the 2020 bond was sold at an average yield of 4.426 per cent, the smallest premium over the equivalent in safer German government bonds since December 2008. The 10-year Irish/German bond yield spread remained close to pre-auction levels of around 130 bps, while the Greek/German spread fell about 10 bps to 299 bps. This is great news for Ireland and highlights that the financial markets are now effectively seeing Irish Yield spreads over Germany as a yield pick up opportunity rather than a risk trade…

As for AIB , the exchange offer announced yesterday could possibly generate a chunk of Capital maybe as much as eur600m but the increased interest costs associated with the issue of more expensive paper in the short term will add to the difficulties of generating profits into the future. It is all abut the short term capital requirements , AIB don't seem concerned about the price of the trade compared to the goal of sowing the market that they too can copy Bank of Ireland and make short term capital gains by offering terms which are very attractive to the existing bond holders. AIB customers beware , it is us wo will have to pay rates in excess of their  funding costs , that is for those lucky enough to be able to get loans…

Kingspan was +5% today , Origin enterprises was +6% today, and Glanbia was -2% today…Yes one to watch , a back up the truck opportunity methinks at the right price…the thing is that there is a degree of uncertainty ahead of the finalisation of the terms of the deal and speculation about  the scale of the ultimate placing which is undoubtedly going to drag on the share price…I am excited about this one as a great trade in the making.

Tomorrow I will be at the St.Patricks day parade with my kids , tonight I celebrate my 14^th wedding anniversary,,,

You have a great evening and happy St.Patricks day.

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 : Food (Glanbia and Aryzta) for thought and AIB

Good Afternoon ,

 

Having been away for a week , it was interesting to come back today and meet with Glanbia after their announcement of their prospective deal to sell the Irish operations to the co-op. The stock is down as the market contemplates the potential overhang of stock that the Co-op will place to pay for the businesses. On the other hand , this transaction if it goes ahead will free up huge amount of management time, will be dilutive in the short term but there will be debt reduction too and the remaining Glanbia businesses will have decent growth , strong cash flow characteristics and this in turn may trigger a significant re-rating of the Glanbia stock. Management have a good track record.  I like it . I suppose the question I now for holders to decide if there will be a window of opportunity for them to sell stock and try and buy it back cheaper ? This is not without risk as the residual components of Glanbia will be attractive and if the price drifts it might just trigger some corporate interest as the stock is already not expensive at these levels.

 

 

Aryzta results this morning were in line. Management spent some effort in convincing analysts that the recovery in the consumer had not appeared yet.  Margins in Europe, which were lower than we had expected, were impacted by the company recruiting sales staff in France and Germany ahead of sales and some exceptional costs in ROI/UK. Better than expected margins in the US were vaguely attributed to a focus on cost control. The company focussed on its strong cash generation and improving balance sheet. On acquisitions, CEO Owen Killian said that the company has remained focussed on strategic opportunities and would not be opportunistic. It's focus for these remain new geographies and new channels. Overall, trading remains difficult, and the company is being managed accordingly. Our forecasts for 2010 remain unchanged at 224.3c in line with company guidance despite incremental improvements in the rate of decline of sales, We stick with the HOLD recommendation.

 

AIB announced their capital exchange offer this afternoon for c.€2.9B of tier II capital instruments.  We estimate, based on outstanding amounts and exchange discounts that full take up could generate c.€570m of equity. Take up rates will vary.  BoI had about a 55% take up rate in its recent offer. 

A gain of c.€300m to €400m would be in line with our expectations.The notes offered in the exchange carry coupons of 10.75% to 11.5%, so there will be a negative impact on future earnings potential.

 

 The quote of the day though is from the guy who likened the market action to a relationship….and said to me that if anyone was in this type of relationship where you had such ups and downs with no certainty that soon you would get totally frustrated. I am only back from a week of and batteroes are re-charged so it will probably take a few days to wear me down…but I can see his point.

 

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.

 

 

 

 

Lias Last Post : Better tone to sentiment , results season re-assures , more to come

Good Afternoon ,

 

This week was marked in Ireland by a series of  big moves in stocks . The week was characterised by nervousness ahead of the individual company results and by assured management performances and good performances by the stocks afterwards.

 

I particularly instance Kingspan , AIB and Grafton as the stars. Next week there is more companies to report

 

Aer Lingus - FY 2009 Results Preview (due Tuesday, 9th March)

We expect a €72m increase in 2009 operating loss to €90m, and a FY cash outflow of over €322m

reflecting the severity of the current crisis. Finalisation of the cost restructuring is essential to minimise

cash burn, and is the only operational basis for protecting (and unlocking) the value within Aer Lingus.

Buy.

 

Tullow Oil - 2009 Results Preview (due Wednesday, March 10th)

Tullow's 2009 financial results are unlikely to contain many surprises due to the high level of disclosure in

the January operating and trading update. Investors will focus on exploration/appraisal drilling results

and programs, as well as any development news, especially in Uganda and offshore Ghana. BUY.

 

Glanbia - Results preview – due Wednesday March 10th

We expect earnings to be in line with the pre-close statement issued on 6th January with EPS expected

to be 30.4c (guidance 30-31c). Focus will be on 2010 outlook which will be driven by global commodity

prices, negotiations with Irish farmers on milk price, growth expectations in the Nutritionals businesses,

and JV performances (including an expected boost from increased SW Cheese capacity). HOLD. Full

preview attached.

 

There are results also  due from Aryzta , Origin , and CPL  and previews will be published before the numbers.

 

No major surprises in the results so far , a better tone to the comments of management and as Greek fears recede somewhat , there is an increased appetite for equities.

 

I am away next week doing altitude training ….skiing with some mates and our families.

 

I already miss you , Talk next week.

 

Have a good week,

 

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 : Irish Life and FBD results ok , market reaction muted though...

Good Afternoon ,

 

Irish Life and FBD results today, No major surprises in either case. Thought the tone of the Irish Life meeting and presentation was positive or so I thought . We are reviewing our forecasts in details now.  Irish Life have completed a bond issue  today which was a big success…  

 

FBD also contained no surprises , the downgrade due to the weather and the NAV downgrade was also expected.

 

The market does not like this and seems to be waiting for it to plateau before recognising that this is a stonkingly cheap stock on a variety of metrics.  

 

Tomorrow the results season continues with Grafton and Total produce.

 

Markets opened lower this morning but went better as the day went on  

 

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 : ok results from CRH ,AIB and a beat from Paddy Power , Irish life and FBD tomorrow

Good Afternoon

 

A good day for the markets , a good day for Ireland in terms of company news flow with AIB , CRH and Passy Power results today.  CRH fell 0.25% today , AIB rallied +2% and Paddy Power rose +3% .

 

Key points in a nutshell :

 

CRH outlook remains difficult, particularly in relation to non-res construction activity in both Europe and the US. Uncertainty continues to be high, not helped by visibility being poor for seasonal reasons, exacerbated by poor weather conditions. Cost reduction targets were unchanged from the early January update. The benefits from cost reduction (from both incremental savings and a reduction in associated restructuring costs) will be significant in 2010 (€460m vs 2009 PBT of €773m) providing a significant dynamic to more than offset lower LFL sales. Capex can be maintained at c.€500m which will allow further free cash generation of just over €1bn in 2010. We still expect an improvement in PBT to €1,015m (from €773m) mostly reflecting the €460m incremental cost benefit being partly offset by a modest further reduction in LFL group sales. We now assume that the 2010 tax rate will be 21% (guidance is half-way between 18.3% and 22.5%). This pushes our forecast EPS for 2010 to 112c from 108c previously and versus 94c (pre-impairment charge) in 2009.  EV/Capital Employed valuation of 1.0x remains attractive regardless of short term visibility concerns.

 

Paddy Power operations continue to perform strongly and we again reinforce the quality of the management team at Paddy Power. However, Killian and I continue to be at odds over the valuation. The stock is currently trading on P/E multiple of 15.4x our revised FY'10 forecasts (we were previously at the upper end of the analysts' range) and an EV/EBITDA of 8.6x. Killian retains the Hold recommendation , he knows I think this is a quality secular growth story with a strong management team and I for one am happy to back Patrick Kennedy and co and pay a premium for this one. Paddy Power adjusted EPS forecasts post the results are FY'10 to 154.6c (previously 148.4c) and FY'11 to 174.4c (previously 167.3c).

 

AIB's  results did not contain much that is different or new, the big change is that management clearly has a plan for capital, strategy and operations and It is clear that management will look to generate capital internally before taking recourse to shareholders, something that should be taken positively.

Therefore, the sale of M&T and a transaction involving BZW look likely.  Combined, sales of these assets would reduce our capital requirement forecast (€4.4B before any liability management) by c.€2.7B at current market prices. Our concern remains that while shareholders would benefit from not having to put up more cash, they could be diluted from any BZW transaction either by having a smaller interest or through a potential strategic investor directly in AIB.  BZW is a relatively high RoE and attractive business, and the disposal could impact the valuation of AIB.  With no strategic overlap we prefer to see M&T disposed. We expect a debt exchange announcement imminently; this might generate a few hundred million subject to price and timing.

Our initial thoughts are that our 2010 forecasts look a bit light on revenue and llps in Ireland, offset by our costs and llps elsewhere being a bit too high. 

 

 

And so tomorrow  we have Irish Life and  FBD tomorrow , 2 Financials with differing experiences today… FBD sinking like a stone… -3.45% ahead of their results and Irish Life +7.6% as its volatility continues…

 

 

Have a good evening

 

Liam

 

 

 

 

 

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

www.merrion-capital.com

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