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NEWS
00th
2014 2014
3rdMONTH
Novemeber
Last week saw the major indices break through resistance levels, as the relief rally continued to gain momentum. Noting
this, we see short term scope for a further 1-3% gain in markets as they approach higher resistance levels, but thereafter
reiterate our sell into strength call. The catalyst for the move higher included additional stimulus measures from the Bank of
Japan, confirmation from the ECB that their Asset Back Security purchase programme would start this month, while
earnings were solid, with the US outperforming European stocks to date. There was also little reaction to Hawkish
comments from the US Fed following the conclusion of QE3, which had the potential to push markets lower. Central Bank
policy will again be in focus this week, with BOE and ECB meetings Wednesday. Markets will be expecting additional
information on the ECB’s ABS programme while looking for additional clues on potential QE in the Eurozone. Markets will
also focus on Chinese Manufacturing data, German factory and manufacturing data and US Non-farm payrolls which
rounds off the week.
This week’s market events
Equities Commentary
M
Bank of Ireland (BUY, TP €0.35) – IMS shows solid progress
Bank of Ireland comfortably passed the ECB’s Comprehensive Assessment and Stress
Tests and its Q3 Interim Management Statement (“IMS”) shows a strong pace of capital
generation. NIM improved to 208bps from 205bps at end-June on lower funding costs and
higher margin new lending. Net loans reduced by a mere €0.1bn from June to €83.3bn, but
this was helped by a 3% appreciation in GBP during the period. Defaulted loans reduced by
€0.3bn with RoI mortgage arrears declining in both its PDH and BTL books. The bank
continues to keep its provisioning assumptions “under review” – however, we fully expect it
to move its 55% PTT assumption when it presents its annual results, leading to provision
write-backs. We reiterate our BUY recommendation and TP of 35c on the equity.
Fiona Hayes | Financials - Banks
Ryanair (BUY, TP €9) – Raises Full Year Guidance in 1H15 results
Ryanair has reported H115 earnings this morning, with net profit of €795m, up 32% YoY.
Trading has been strong, with traffic up 4% to 51.3m customers. Load factor was up 4% to
89%, with average fares up 5%, contributing to a 9% increase in total revenues to €3.5bn.
Significantly full year net profit guidance has been raised by 17%, from €650m to €750m€770m. Profits are therefore likely to be up 45% YoY. Consensus (Bloomberg) is currently
at €680m and hence forecasts should rise by 10%. On revised Consensus forecasts, RYA
is trading on a FY15e PE of 12x vs. the European sector on 10x. However, RYA’s growth
and returns are far superior. We reiterate our BUY recommendation and TP of €9.
Robin Byde | Transport Research
T
W
T
Insurers – AIG & Allianz our preferred names ahead of results
CORPORATE
Ryanair – H1/15
AIG – Q3
HSBC – IMS
ECONOMICS
CH – HSBC Manuf.
PMI
US – ISM Manuf.
CORPORATE
ECONOMICS
BMW – Q3
EZ – PPI YoY
DCC – IMS
US – ISM New York
Alibaba – Q3
EZ – EU
ABF – FY14
Commission Eco
Forecast
Glencore – IMS
Legal & General –
IMS
Imperial Tobacco –
Prelim FY14
Persimmon - IMS
CORPORATE
ECONOMICS
Smurfit Kappa – Q3 EZ – Retail Sales
Aer Lingus – IMS
CH – HSBC
Marks & Spencer – Composite PMI
H1/15
US – Markit
Composite PMI
First DerivativesIMS
ECONOMICS
CORPORATE
Kerry - IMS
UK – BoE Bank
Siemens – Q4
Rate
easyJet – Traffic
EZ – ECB
Stats
Refinancing Rate
Schroders - IMS GE – Factory Orders
AstraZeneca – IMS
YoY
Morrisons – IMS
RSA – IMS
Aer Lingus – Traffic
Stats
HeidelbergCemenet
– Q3
We remain positive on the Insurance sector and believe that it has the potential to
outperform during earnings season. As such we have highlighted AIG (N/C) and Allianz
(N/C) from our core portfolio who are set to announce earnings this week. We see the
recent sell off in Allianz, following the departure of Bill Gross as overdone, noting that the
Asset Management division contributes just 10% of revenues. Bloomberg consensus is for
revenues of €26.1bn, operating profit of €2.56bn and adjusted EPS of €3.31. AIG continues
to reduce costs and divest non-core assets. It derives 67% of profits from the US, offering
investors a play on the US recovery story while reducing the impact of a stronger dollar on
earnings. Bloomberg consensus is for Revenues of $14.5bn and an adjusted EPS of
$1.093. The shares are also trading at a modest 0.68 P/BV.
F
BMW – Poised to benefit from potetnial short term rally
10/11/14
Kingspan - IMS
11/11/14
11/11/14
Vodafone – HY14
CRH - IMS
12/11/14
12/11/14
Tullow Oil - IMS
Barratt Developments – IMS
18/11/14
18/11/14
18/11/14
PaddyPower – IMS
FBD - IMS
Hibernia REIT - IMS
As highlighted in the market view, we see the potential for the major indices to rally higher
in the short term given their move through significant resistance levels last week. Core
portfolio stock BMW (N/C) is one stock we believe may be a beneficiary from the potential
move higher this week. The company is due to report earnings tomorrow and strong
earnings will act as an additional catalyst to boost the shares in addition to the wider
positive sentiment in the DAX. The company can boast high growth in the US and China
which mitigates some European market risk. The shares are trading on just 9x FY15e
earnings, and offer a dividend yield of 3.82%
Equities
Portfolio Management
Research
CORPORATE
Allianz – Q3
IAG – Traffic Stats
National Grid –
HY/15
ECONOMICS
GE – Current
Account Balance
US – Nonfarm
Payrolls
Upcoming Events
Bonds
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