Philip O'Sullivan's Market Musings

Financial analysis from Dublin, Ireland

Market Musings 5/2/2012

with 2 comments

It’s the calm before the storm as we’ve a seriously busy week ahead in terms of scheduled corporate news in both the UK and Ireland. Let’s recap on what’s been happening while I have a spare moment!


(Disclaimer: I am a shareholder in Ryanair plc) As had been widely expected, Hungary’s Malev ceased operations early on Friday. Ryanair illustrated perfectly the flexibility in its business model by bringing forward the opening of a new base at Budapest to exploit the new gap in the market. In other news, Ryanair also issued an open letter to Aer Lingus warning that it would resist any attempts by AERL to top up the IASS pension fund over and above previously disclosed levels. In a final piece of Ryanair related newsflow, the airline announced that the number of passengers it carried in January was -6% yoy, which is broadly in line with expectations. The fact that load factors were flat yoy at 71% to me illustrates that good sense underpinning Ryanair’s decision to ground 80 aircraft (nearly 30% of its fleet) over the winter.


In the energy sector, there was good news for Tullow, which finally inked a PSA with the Ugandan government. Dragon Oil was also the subject of scrutiny by some of the Dublin brokers, with Davy raising its NAV estimate by 7% to 678p, while Goodbody recently upped its total risked NAV derived price target on the Turkmenistan based oil producer to £8.15. Its share price closed at £5.16 on Friday, and for the sake of full disclosure it’s a stock that an investment fund I advise is contemplating adding to its portfolio.


(Disclaimer: I am a shareholder in Independent News & Media plc) I was interested to read that Dermot Desmond has increased his stake in INM to 5.75%. I have a small position in INM and wonder if this is shaping up to be a special situation deserving of more in-depth analysis to see if it’s worth buying more shares in the company. Finding the time to do such an analysis is of course easier said than done!


Elsewhere in the TMT space, I was disappointed to read that the amount of VC funding raised by Irish technology companies fell by 11.5% last year.


In the blogosphere, Wexboy did up an interesting piece on Tanzanite miner Richland Resources. Richard Beddard wrote a thought-provoking article on N Brown (regular readers will know that my preference for some time has been to avoid UK consumer facing stocks, with only Marston’s proving to be the exception to the rule for over a year now). John Kingham wrote a detailed piece on Smith & Nephew that served to remind me of how little attention I give to the pharma sector! Contrarian UK made a very welcome return to blogging by doing a detailed write-up on message board favourite Xcite Energy.


Finally, looking ahead, the main scheduled Irish corporate news this week are FY results from Elan & Smurfit Kappa Group (both on Wednesday) along with AGMs for United Drug (Tuesday) and Greencore (Thursday), which will no doubt provide plenty of food for thought.

Written by Philip O'Sullivan

February 5, 2012 at 7:21 pm

2 Responses

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  1. […] I am an indirect shareholder in Dragon Oil plc) As I alluded to recently, an investment fund that I am involved in has gone long Dragon Oil. A couple of days ago I […]

  2. […] least some benefit from its demise. Should Ryanair replicate its recent trick in Hungary, where it brought forward the opening of a new base at Budapest to exploit the demise of Malev, and step up its assault on the Scandinavian market, the benefit could be quite significant. Time […]

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