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Ryanair Holdings plc Message Board

wexboymail 4 posts  |  Last Activity: Apr 6, 2014 11:58 AM Member since: Jan 27, 2012
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  • Company: New Ireland Fund

    Prior Post(s): 2012 & 2013

    Ticker: IRL:US

    Price: USD 14.31

    IRL’s the only Irish closed-end fund available globally to investors. [Yes, it's NY-listed, but so what - its portfolio is mostly denominated in EUR & it isn't hedged]. Judging by the likes of Green REIT, one might presume this trades on a 20-30% premium to NAV..?! Er no, not quite – you can buy this little gem on a somewhat astonishing (for such a hot market) 12.3% discount! But decent discounts for (decent) funds are exceedingly rare in the US. And surely we should have faith in the average US retail investor? If they’re prepared to pay a ridiculous 52% premium for Bill Gross’ thoroughly average Pimco High Income Fund (PHK:US), for example, surely they’ll drive IRL to a tasty premium at some point? Well, when word finally trickles down to them (too late, of course) how red-hot the Irish market is…

    There’s obviously no getting away from the market cap giants here, but at 38% the fund’s aggregate allocation to Ryanair Holdings (RYA:ID), CRH (CRH:ID) & Kerry Group (KYG:ID) is much lower than you’ll see in the ETF alternatives. I also have faith active stock-picking can still add a little edge in the Irish market, even it boils down to avoiding/under-weighting a potential disaster or two, and/or cherry-picking a few small(er) caps which would be a negligible component of an ETF. I’m not going to speculate on an underlying NAV return here, but I definitely think the fund deserves a 1.0 P/B multiple:

    USD 82 M Equity * 1.0 P/B / 5.0 M Shares = USD 16.32

    For a fund, IRL’s decently under-valued. And if you like it, there’s not much need to keep reading TGISVP – just buy a nice allocation for your portfolio, and sit back & relax! But hey, remember to come back…only a minority of my portfolio & attention’s actually focused on Irish stocks. ;-)

    Price Target: USD 16.32

    Upside/(Downside): 14%

    _

  • Reply to

    TGISVP III - ICON

    by wexboymail Feb 25, 2014 10:03 PM
    wexboymail wexboymail Feb 28, 2014 3:49 PM Flag

    Thks Carolyn - full article, and others, are from the Wexboy investment blog - just Google it ;-)

  • wexboymail by wexboymail Feb 25, 2014 10:03 PM Flag

    2014 – The Great Irish Share Valuation Project (Part III)

    Company: ICON

    Prior Post(s): 2012 & 2013

    Ticker: ICLR:US

    Price: USD 48.70

    As anticipated, ICON’s recent (large) contract wins are now feeding through the P&L very nicely. The company enjoyed 15% Q4 net revenue growth in Q4, and even better 20% FY growth. This has been accompanied by the expected expansion in margins – at 11.2%, ICON’s Q4 operating margin’s finally back to normal. It also booked $446 million of net new business, for a 1.3 book-to-bill ratio in the latest quarter, and a backlog of 3.1 billion.

    Considering the company’s very healthy cash flow & revenue growth rate, its current operating margin now deserves a 1.2 P/S multiple. ICON’s also got 321 M of net cash on hand, and huge scope to lever up its balance sheet (particularly with a 3.1 B backlog). I calculate 385 M of debt would put net interest expense around 15% of operating profit – let’s count just 50% of that debt, plus 100% of available net cash, and include it as a (positive) cash/debt adjustment to my P/S valuation.

    We’ll also assign a P/E multiple: With its current rate of revenue growth & margin expansion, the company’s enjoyed massive earnings growth in the past year (+56% in the latest quarter, and +77% FY!). That obviously isn’t sustainable – but annualizing Q4 diluted EPS of $0.53 & applying a 20 P/E multiple (reflecting the FY revenue growth rate) may appear high, but seems quite appropriate in this instance:

    (USD 2.13 EPS * 20.0 P/E + (USD 1,336 M Net Revenue * 1.2 P/S + 321 M Net Cash + 385 M Debt Adj * 50%) / 61.2 M Shares) / 2 = USD 38.61

    Currently trading on 22.9x FY-2014 guidance (of $2.125), ICON looks fairly over-valued to me – but with US big pharma stocks generally back in favour, and the biotech sector on fire, it’s no great surprise to see a high valuation here also.

    Price Target: USD 38.61

    Upside/(Downside): (21)%

    _

    See the Wexboy investment blog for links, charts, full post, etc.

  • 2014 – The Great Irish Share Valuation Project (Part II)

    Including:

    Company: Dalradian Resources

    Prior Post(s): 2013
    Ticker: DNA:CN
    Price: CAD 0.80
    Dalradian continues to burn cash at a merry pace, but hasn’t progressed too far from its 2012 resource report & Preliminary Economic Assessment (for Curraghinalt, in Northern Ireland). However, a new resource report is promised – any upgrade of the company’s inferred gold resource (2.23 M oz) could have a substantial valuation impact… Meanwhile, let’s focus on its 10 K oz measured resource & its 460 K oz indicated resource. I’d normally ignore resources in these categories (as I’m doing with the inferred resource), but based on the PEA I think it’s justified to incorporate them into my valuation – albeit on a fairly conservative basis. My (updated) valuation rule of thumb for gold is $150 per in-the-ground oz - but I’ll haircut this by 50% for measured & 75% for indicated.
    DNA has CAD 9.4 M on hand, and is now in the middle of an underwritten offering. Let’s presume the (basic) offering gets completed (within the next week) – that brings in an additional 12.1 M of (gross) cash, against the issuance of another 17.3 M shares. We’ll also deduct for the company’s annual cash burn, which looks to be around 18.1 M right now. [NB: Dalradian's abandoned its Norwegian exploration programme, on which it spent (say) 3-4 M in 2013. Arguably, I could adjust down my cash burn estimate accordingly, but I suspect this spending will just end up being diverted into incremental Northern Irish spending]:
    (CAD 9.4 M Cash + 11.5 M Offering Net Cash – 18.1 M Cash Burn + (10 * 50% + 460 * 25%) / 1,000 * $150 per oz * 1.1005 USD/CAD) / 106.8 M Shares = CAD 0.212
    Dalradian looks wildly over-valued here. However, a potential upgrade of the company’s inferred resource (as already noted) would produce a substantial uplift in valuation. On the other hand, the estimated initial capex cost of the project is CAD 192 M – a huge undertaking in relation to Dalradian’s current resources, or market cap! And one that will surely result in significant dilution for existing shareholders. OK, right, that’s probably the best you can bloody well hope for with most junior resource stocks..!
    Price Target: CAD 0.212
    Upside/(Downside): (73)%

    See the Wexboy Investment Blog for full post, links, etc.

RYAAY
53.33-0.73(-1.35%)Jul 29 4:00 PMEDT

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