Market Musings 16/12/11
So much for my prediction that newsflow would die down before Christmas! We’ve seen a lot of companies issue trading updates, while there has also been some positive indications on the prospects for further asset disposals by the Irish banks, which should help reduce the financial burden the banking system has placed on taxpayers.
(Disclaimer: I am a shareholder in Irish Life & Permanent plc) I was pleased to read that IL&P expects to receive more than 10 bids for its UK loan book, which bodes well for the haircut (25% assumed in PLAR) it’ll have to take on the sale. This also has positive read-through for IBRC’s upcoming disposal of the old Anglo Irish Bank UK loanbook. So, hopefully some money saved for the Irish taxpayer.
Prime Active Capital issued a downbeat update yesterday, in which management said it was writing off its investment in Media Square plc and also revealed tough trading conditions for its operating business, which retails mobile phones in the United States.
Another Irish microcap, Siteserv, issued H1 results this morning. Management has done well to grow revenues and operating profits in such difficult conditions, but the company remains saddled with borrowings – net debt of €150.3m is nearly 10x its trailing twelve month EBITDA (€15.5m).
(Disclaimer: I am a shareholder in Playtech plc) I was pleased to see Playtech acquire Ash Gaming today. Ash will fit well within Playtech’s portfolio and it makes a nice change to see the company doing some M&A that doesn’t involve a related party!
Dragon Oil issued a solid drilling update this morning, in which the company announced that it has achieved its previously stated goal of hitting a production level of 70kbopd by the end of 2011.
I was interested to read that Telefonica has cut its dividend. My interest in the Europe’s former telecom monopolies starts and ends with their dividends (given the extremely muted growth outlook for the sector as a whole), so this does nothing to improve my sentiment towards the industry.
Following on from my recent blog, I was interested to hear that Boyne Valley has prevailed in the battle to buy Premier Foods’ Irish business. It’s good to see more consolidation in the food and beverage sector – which is absolutely necessary to counter the margin crushing that arises from big multiples’ playing suppliers off against each other. Speaking of which, I was pleased to learn of the sale of Cooley Distillery for €71m. It was founded by Smurfit MBA graduate John Teeling and this current Smurfit MBA student salutes him!