Good Afternoon ,
Well that was the week that was …a positive start with reassuring numbers from Kingspan on Monday which assuaged some of the nerves going intot the crucial CRH numbers on Wednesday , followed by a decent Aer Lingus set of results and an absolute shocker from CRH which set the tone for the whole week…CRH and S&P downgrading Ireland put the nail into sentiment so the strong positive performance from Paddy Power and the upgrades which accompanied Glanbia were largely lost. FBD did ok too. Thursday was a day of respite and then today we had results from ICG and INM.
The ICG story is and continues to be a tale of patience with a strong NAV and strong cash flow and a fully invested business presenting an opportunity at some stage for significant unlocking of shareholder value. CEO Eamonn Rothwell was as cautious as ever but this is a buy it and tuck it away story with a big yield and succession of special dividends to come to placate the patience of the shareholders.
INM delivered their numbers and the ebullience has somewhat returned with CEO referring to the scale of the success at their efforts to pay down debt… He did not quite highlight that the paydown was as a result of the rights issue and debt /equity conversion. It was ever thus but right now the stock is cheap on 6x EV/EBITDA and there is a distinct message of quiet optimism that advertising in Ireland is actually doing ok and picking up , Australia is ok though South Africa is soft. A speculative punt type o stock rather than a quality core holding…as long as you buy this one in the full knowledge of the management team track record.
Aer Lingus had to endure the somewhat surprising news that their franchise partner Aer Arann has sought examinership. The franchise arrangement known as Aer Lingus Regional involves 5 of Aer Arann's fleet of 13 planes. In my conversation with Aer Lingus , they did point out that when the business was launched they had said that they did not think that taking an equity stake in Aer Arann was in their best interests. We will see how the examinership unfolds as it might throw up some interesting opportunities…
And to close the week in the same manner as we started Rockwool who would be a peer of Kingspan released their half one numbers with an upgrade.
The scoreboard at the end of this week ? No bad news with the shock exception of CRH.
But at the end of the week at current prices….I have to say that CRH is at levels which it is worth hanging on and waiting for the recovery…I am as big a fan of Paddy Power as ever , Kingspan does not look particularly cheap but their business seems in good shape and so definitely one to look for opportunities as they have significant leverage to any recovery, Aer Lingus is definitely on the right trajectory and definitely a buy here and Glanbia too looks fine. Even FBD was ok though no one really liked the non cash writedown of their Irish Hotels. Tullow delivered but is now caught up in Ugandan government wrangling re Heritage etc, I hope this will be ok…I have enough of it in my own pension fund to count,,,
Next week we get to hear from Kerry on Tuesday and this stock has been a cracking performer into the numbers so I wonder how much upside there is from here. Irish Life also on Tuesday and We all await news re the EBS and their capital plans and developments re their funding position…I hope they can comfort their weary shareholders…Grafton also vie for attention on Tuesday , I am intrigued about what they have to say, They have been making positive noises but the stock is range bound, Any sign of a slowdown in the UK will be taken badly here. Total Produce then announces results on Thursday. I suspect these will be uneventful but the stock is cheap and high yielding.albeit the stock is too small for any but the most dedicated small cap follower.
Have a good weekend.. my family returns this weekend from their summer soujourn and the kids go back to school on Monday.
Plenty to look forward to . Have a good weekend and for my
Liam
___________________________________________
Liam Boggan
Merrion Stockbrokers
Tel.: 353-1-2404171
Mob:353-87-2313505
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