12
Contents
Market View: European
equities continue to
outperform US equities
JP Morgan: Gets green light
for dividend increase and
buybacks



European equities opened higher this morning, following on from a stronger Asian session
overnight
Demand for Eurozone government bonds remains strong since the beginning of the ECB’s
QE programme, with most countries’ 10yr yields trading at all time lows; 10yr Germany is at
0.20%, Ireland at 0.69% and Italy at 1.12%
On the data front at 10.00, Eurozone Industrial Production for January is expected to increase
0.1% YoY (prior -0.2%)
At 12.30, US Retail Sales for February is expected to increase 0.3% MoM (vs. prior -0.8%),
which will be closely watched given the US consumer accounts for 70% of the economy
Aryzta – (N/C)
Previous Close
€71
IRISH PAPERS TODAY
Depreciating euro boosts
export and tourism sectors
(The Irish Times)
Permanent TSB to sell
shares and bonds to get
€525m
(The Irish Independent)
MARCH 2015
Market View

Aryzta: Origin reports strong
H1 earnings
TH
JP Morgan – (N/C)
Previous Close
$60.24
Lufthansa says cost-cutting
to continue as profits fall
(The Irish Times)
INTERNATIONAL
PAPERS TODAY
Deutsche and Santander fail
US stress test
(Financial Times)
Clock is ticking down on a
Greek solution
(Wall Street Journal)

Origin Enterprises, which is 68% owned by Aryzta, reported a
2.7% increase in Agri-Service revenues of revenues €531.6m for
the first 6 months of FY15

However, operating profit fell 2.9% to €10.4m compared to the
same 6 month period in FY14

H1 EPS was 5.8c however, management reconfirmed full year
FY15 EPS guidance of 60c per share
Comment: Management said Origin’s performance in H1 was satisfactory,
and its Agri-Services operating profit was in-line with last year, against a
more challenging backdrop for primary food producers. Earnings from JVs
and associates were strong given the highly competitive market place.
Aryzta holds a 68% majority stake in Origin, and is set to report H1/15 this
th
Monday 16 March. H1/15 consensus sales of €2.4bn, operating profit of
€236m and EPS of €1.687 are expected. We like Aryzta within the food
space, given its free cash flow generation ability, its global diversification
and trades at 15x FY15e earnings, which is a 33% discount to the wider
food sector.

The US Federal Reserve has given JP Morgan a green light on
its 2015 capital distribution plans

As part of the plans, JPM will increase the quarterly dividend to
$0.44 from $0.40, starting from Q2 2015

The group will also initiate $6.4bn in share buybacks, beginning
st
the 1 April 2015 and running to June 2016
Comment: This is more good news for our preferred name in US banking,
given that the Fed had vetoed some of the European bank’s US plans. We
continue to like JPM for its diversification within the banking sector, strong
cost management, and its exposure to the US market, which shields it
from the dollar strength to some extent. Its core US Commercial and
Community bank continues to grow, with loan origination up +18% and
deposits up +8% in the last quarter. The Investment Bank has maintained
its number 1 position in the market on fees earned, while its Asset
Management unit continued to grow its Assets Under Management (AUM).
The buybacks and dividends should provide further support to the share
price, which is up 10% since February. JPM trades at 1x P/BV a discount
to peers on 1.1x, while offering an attractive FY15 dividend yield for a US
company, at c. 3%.
Dollar surge poses policy
dilemma for Fed
(Financial Times)
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