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President Barack Obama meets with members of his national security team to discuss the situation in Egypt, in the Situation Room of the White House, July 03, 2013.
Origin Enterprises €93m disposal of Welcon Associate: Liam Igoe of
Goodbody comments - - "Origin has announced the disposal of its 50% shareholding
in its joint venture, Welcon, to its
partner Austevoll Seafoods for a cash consideration of c. €93m. The group’s
share of PAT
averaged at €8.4m for the 3 years to FY12, implying an acquisition multiple of
11x PE. In our
sum-of-the-parts model we had valued the business on a FY13 PE of 9x, or value
of c. €70m.
It also represents a premium to net assets of €68m. The deal is expected to
be completed in
H1 of FY14.
The disposal would be slightly dilutive to FY14 eps (-3.8% or 2c). At this
point, however, we
are likely to leave forecasts unchanged given the additional funds have been
funding further growth in the core Agri-services business, therefore we will be
this segment forecast growth. The deal also leaves the company in a substantial
position in FY14.
The disposal, with €23m upside to our current valuation of the associate
was well flagged to the market as management indicated its intention to monetise
assets in its Associates business to fund growth in the Agrii business. It also
positions the business strategically, with c. 10% of earnings now coming from
Associates. Origin is currently trading at a discount to agri-food companies on
basis (FY14 PE of 9.7x vs 12-13x for its peers). Given the prospect for high
earnings growth and a balance sheet that provides scope to grow the dividend
as well as invest in the business we believe such a discount is unwarranted. As
result we believe this valuation gap will close in the coming months.
Aer Lingus: Record long haul load factors in June:
Dónal O'Neill of Goodbody
comments - - "Aer Lingus has delivered an extremely impressive set of traffic
stats for June which fully
vindicate its strategy around network and operational optimisation over the past
putting it in a position to maximise growth opportunities on long haul in
future. At a group
level, passenger numbers increased 3.4% while load factor increased 3.6pts to
The long haul business was the real star of the show, which saw a 17.2%
passenger numbers and a 2.1% increase in load factor to a record 94.5%. This is
exceptional outturn in the context of a 15.5% increase in capacity on
Short haul was also quite impressive as passenger numbers increased 1.7% with
increasing 3.5pts to 81.6%.
Yesterday, Aer Lingus announced the launch of new services to San Francisco
the latter of which will be provided on a damp lease basis from ASL using Boeing
aircraft. The former service is being introduced in response to growing
from the increasing number of Silicon Valley based IT companies which have ever
operations in Dublin and Ireland. As a result, long haul capacity will increase
by c.23% in
Aer Lingus has become one of the best airlines in Europe following a period
extensive restructuring and capacity consolidation. Despite this, the stock
significantly undervalued, trading at just 3.6x FY14 adjusted EV/EBITDAR. We see
Aer Lingus as our top pick in the airline sector. BUY."
Economic View: Confidence in the periphery remains fragile; Juliet Tennent,
economist at Goodbody, comments - - "Stress in the peripheral bond markets is to
the fore again this week, driven by uncertainty around political stability in
Portugal and to a lesser extent by a looming Troika deadline for Greece.
Portuguese political problems stem from the resignation of the Finance Minister,
Vitor Gaspar, earlier in the week, which prompted the resignation (albeit
unaccepted) of the leader of the junior coalition partner, Paulo Portas.
These resignations, coupled with rumours of further ones to come, left Prime
Minister Coelho’ coalition vulnerable. The austerity fatigue that the IMF warned
against in its latest review of Ireland seems to have started amongst the
politicians in Portugal. There was also media speculation that another bailout
programme was on the cards. The uncertainty created saw Portuguese yields come
under severe pressure with the yield on the 10 year rise over 100bps yesterday
before retreating to stand at c.7.34% (having tested 8% at one stage), its
highest level since the end of 2012. Against this negative backdrop yields on
the Irish 10 year increased by 7bps to just over 4%.
Mr. Portas is due to meet with Prime Minister Coelho today to attempt to
reach a “viable solution” and restore stability. However, the swift increase in
Portuguese yields acts as a stark reminder of how delicate market confidence in
the periphery remains and will doubtless give the ECB food for thought during
its monthly meeting today."
Portuguese political instability provides warning for Ireland: Conall Mac
Coille, chief economist of Davy, said today: "DAVY VIEW: Stock indices fell back
on Wednesday as political instability in Portugal hit sentiment. The Euro Stoxx
50 fell 1.25% and the S&P 500 rose marginally by 0.1%. These falls came despite
a strong ADP employment report indicating that US jobs growth was 188,000 in
June. Irish jobless claims fell by 2,500 in June to their lowest level since
August 2009, sufficient to push down the CSO’s estimate of unemployment to 13.6%
from 14.9% one year ago.
Portuguese political instability provides warning for Ireland
Equity indices fell on Wednesday: the Euro Stoxx 50 fell 1.6% and the S&P 500
rose marginally by +0.1%. These falls came despite encouraging economic data. In
particular, the ADP employment report pointed to stronger US jobs growth of
188,000 in June – ahead of Friday’s crucial non-farm payrolls. That said, a
widening in the US trade deficit to $45bn in May suggested that Q2 GDP growth
may be weaker than previously expected. Today, markets should be relatively
quiet, with the US closed for the July 4th holiday and neither the ECB nor Bank
of England expected to change policy.
The key news in Europe yesterday was that the Portuguese government had lost
the leader of its junior coalition partner. Portuguese government yields surged,
briefly breaking through 8%, up from 6.5% on Tuesday. In this context, Irish
yields remained stable, with the 10-year remaining close to 4%. Nonetheless, the
events in Portugal illustrate the potential impact of political instability onto
sovereign borrowing costs with investors suddenly doubting the resolve to stick
to the deficit reduction plan.
This should serve as a warning for the Irish government, especially with
coalition partners now debating how to utilise the illusory €1bn ‘savings’ from
the promissory note deal. Indeed, much political commentary implies some budget
giveaway will be required before the next election. Despite the new fiscal
advisory council, as in Portugal, the political cycle still threatens progress
in Ireland’s deficit reduction plan.
Irish Live Register jobless claims data showed the unemployment rate falling
to 13.6% in June, down from 13.7% in Q1 2013. Normally, large swings in jobless
claims are required so that the CSO’s estimate of the unemployment rate falls.
But the seasonally adjusted total fell by 2,500 in June to its lowest level
since August 2009. Both employment growth and net outward migration will have
helped to push down on social welfare claims. But yesterday’s data also showed
that new claims in Q2 continued to fall to fresh lows, another positive sign
that the labour market is stabilising."
Markets are closed Thursday
for the Independence Day holiday.
In New York Wednesday, the
Dow rose 56 points or 0.38% to 14,989.
The S&P 500 added 0.08% and
the Nasdaq advanced 0.30%.
The MSCI Asia Pacific
Index rose 0.4% Thursday.
The Japanese Nikkei 225
dropped 0.26%; China's Shanghai Composite gained 0.59%;
Korea's Kospi index rose 0.79%; Australia's S&P/ASX 200 advanced
1.07%; in Mumbai, the Bombay Stock Exchange the
S&P BSE India Sensex Index climbed 1.22%.
the Dow Jones Stoxx Europe 600 is up 0.70% in
morning trading Thursday.
the ISEQ has risen 0.41%.
has gained 0.95%; Origin Enterprises has added 6.70%.
reports that for
the first year since the futures were created, Brent crude is poised to overtake
West Texas Intermediate (WTI) oil as the world’s most-traded commodity.
trading in Brent jumped 14% to average 567,000 contracts in the year to November
20 compared with all of 2011, while WTI fell 17% to 575,000, according to data
from the ICE Futures Europe exchange in London and New York Mercantile Exchange
compiled by Bloomberg. The number of Brent futures changing hands has exceeded
those for WTI every month from April through October,
the longest streak since at least 1995.
Brent, produced in the
North Sea, is gaining favour among traders because of its role as the benchmark
for energy prices from Saudi Arabia to Russia. Prices have climbed 34% in the
past two years, reflecting everything from war in Libya to the embargo on Iran.
WTI, the main grade in the US, has risen 9% as the nation, which prohibits crude
exports, has struggled to clear a glut at Cushing, Oklahoma, the delivery point
for Nymex futures.