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ISEQ dips, investors unconvinced on deal

Friday, October 19 12:43:38

The ISEQ slipped deeper in to the red this morning as investors remained unconvinced that there will be a significant debt deal from Ireland emerging from the latest leaders' summit.

By 12:30, the index was down 11.38 points to 3,251.31.

Following the opening of this week's EU council meetings, Commission President Barroso indicated in a statement last night that EU leaders have agreed to put in place legislative decisions on a single European financial regulator by the end of 2012. EU leaders have confirmed the summit agreement on June 29th, and will honour the commitment on direct recapitalisation of banks. Hwever, markets are unsure whether or not this will apply to legacy debts - such as Anglo's promissory notes.

But Davy analyst, Conall Mac Coille, is more upbeat. "The key issue for Ireland is whether the ESM fund may take equity stakes in Irish banks, helping to reduce Irish government debt. Last night's statement indicates that the key condition, a single supervisory regime, will be put in place in the near future, allowing the ESM to consider capital injections. And the confirmation of the June 29th agreement also includes the commitment by EU leaders to consider options to help Ireland's debt sustainability. However, Barroso fell short of indicating that the ESM will be allowed take stakes in 'legacy assets', so it is not clear that the opposition voiced by the Dutch, Finnish and German finance ministers in September has been overcome."

Paddy Power's shares rose 5c to E57.55. William Hill has released (October 19th) a strong set of Q3 numbers, with Q3 profit run-rates well ahead of what we are looking for in H2 overall. Group net revenues were up 9pc (Davy H2 forecast: +7.9pc), with costs in both retail and online lower than expected. The strong trading update has been accompanied by an announcement that William Hill is to proceed with a valuation of Playtech's stake in William Hill Online. That process will be concluded by February 2013, with William Hill then deciding whether to acquire the stake by the end of Q1.

C and C will report H1 results to end-August on October 23rd. "We expect the weak trends reported in Q1 for GB and Irish cider to have extended over the wet summer months. C&C's beer business is likely to have performed well despite the difficult summer trading conditions. The export business should continue its strong double-digit growth. We expect declines of 6pc and 5pc in group sales and EBIT respectively (constant currency). We forecast H1 EBIT of E64m. For the full year, we expect EBIT of E112m (broadly a flat out-turn yoy). This is at the bottom of management's guidance range of E112-118m, issued at the end of June," said Davy's Barry Gallagher. Shares in the drinks group rose 1c to E3.71.