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

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