Liams Last Post: Dublin drifts despite DCC and United Drug. CRH looks ever more tired...and GNC still interested in NFDS

Good Afternoon,

 

Dublin opened positively like most of the European markets but sank on low volume despite a positive trading statement from United Drug and a 1% market share increasing transaction from DCC who spent eur 27.7m on Pace Fuelcare in Southern England. Price of the transaction seems to be about 5.4c per litre of oil delivered and this compares broadly with the last transaction which was when they bought Bayford in 2009. Dcc as usual did not disclose much by way of details re profitability but it is expected to be earnings accretive. DCC market share in the UK is now 15% post this deal with them seeing potential to go to 20% to 25% in the UK.

 

The Daily Telegraph has published a story saying that Greencore has linked up with a private equity partner in their pursuit of Northern Foods. We have published our view that Greencore could stretch their balance sheet to do the deal themselves but obviously a partner would relieve some of the funding pressures but it has to be seen how high they may be prepared to bid for northern Foods and how the synergies would get split out. This is a deal not without risk particularly as Greencore Management consultant CEO has spelled out for the benefit of their customers exactly how much synergies they think they could capture. I would be surprised if the Retailers just ignored that gift horse of information without suggesting that it might be divvied up between Greencore and themselves …   

 

CRH continues to look more and more tired and I looked at the yawning gap now that has appeared as analysts have not matched the market rally in CRH with any upgrades to forecasts for 2011 forecasts. 20x 2011 earnings seems expensive to me …but the market has been happy to let this one drift up. I think it is timely now to take risk off the table with this one and switch to St.Gobain or Grafton or Lafarge or Holcim .

 

The airlines stocks are struggling with the market focussed on the divergence between WTI and Brent prices. This is a popular topic today so I wont bore you with it . Suffice it to say that for some reason WTI oil is now $18 cheaper than Brent. Jet Fuel continues to hold at the $953 per tonne level at its recent highs.  

 

ICG has been one of the stocks I have been quietly pushing for some time and it continues to creep better.

 

In Ireland the most interesting news centred on the deal that Google did to acquire the Montevetro office tower in Dublin for eur99m. It is noteworthy that the deal comes hot on the heels of Aldi buying the Grafton site yesterday. Two international buyers of irish property in 2 days. Interesting for sure.

 

Have a good evening

 

Liam

 

 

 

 

 

  

 

 

 

 

 

___________________________________________

Liam Boggan

　

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