Member Info for ten4

Davy Stockbrokers on RTE Brokers today.

"Improved outlook; dividend reinstated with FY 2021 results

Proactive action on impairments in 2020, together with an improved outlook and better capital position, provides a more constructive foundation for Bank of Ireland (BOI) for the remainder of 2020. This is assisted by further self-help measures to offset the ongoing and known challenges to revenues and UK mortgages. As a result of these improvements in capital and profitability, we reinstate dividend payments with FY 2021 results and set a price target of €3.30 per share. "

Taken from RTE Brokers. Cantor. 29th June 20.

"AIB Group and Bank of Ireland: Debt Market restructurings
Monday, 29th June 2020
• AIB Group replicated a recent move by Bank of Ireland to
restructure its debt profile through the early redemption of an AT1
bond.
• The bank launched a Tender Offer for its €500m 7.375% AT1
Perpetual Bond at €101.75 and replaced it with a new 6.25% AT1
Perpetual Bond
• Demand for the new bond was heavy with bids received for €5bn
which allowed the bank to raised €625m against its original target
raise of €500m
• As was the case with the recent Bank of Ireland restructuring, this
strong demand facilitated a higher level of capital raise at a lower
coupon than the tendered bond
• This excess level of demand for both bond issues represents a
strong vote of confidence in the two Irish Pillar banks from Debt
Markets
• This positive reaction contrasts to the continued negative sentiment
towards the underlying equity of the two banks which are trading
close to multi-year lows
• While there has been some favorable follow-through in the equity
prices of both banks following these debt restructures, they both
trade close to their lows during the February/March market sell-off
• Both AIB Group and Bank of Ireland are currently trading on a
Price/Book valuation of around just 0.23 times which is a 50%
discount to the pan-European banking sector
• While the sector continues to face challenges such as negative
ECB deposit rates, negative bond yields and sub-trend economic
growth, this vote of confidence from the debt markets is a positive
development
• Equally, the recent move by the ECB to improve the terms of its
Targeted Long Term Refinancing Operations (TLTRO) is a positive
development for the European
banking sector overall
• While we remain generally cautious on banks until we see stronger
signs of an economic recovery, both AIB Group and Bank of Ireland
offer clients a potential trading opportunity at current levels. "

Taken from RTE Brokers Reports today. Davy.

" Irish Banks.
COVID-19 clouds outlook but balance sheets well positioned

Irish banks have suffered over the last number of years – bounced by Brexit, roiled by low interest rates, discomfited by politics and awaiting credit growth that never materialised – thus detracting from significant restructuring efforts. COVID-19 presents indiscriminate threats and shrouds the outlook with uncertainty. Yet Irish banks face the pandemic from positions of capital, funding and liquidity strength. The phased re-opening of the economy is progressing successfully thus far but further supports, particularly for businesses, will be required to ensure losses are limited and the economy is rebooted from its period of hibernation. "

from RTE Brokers Reports, Cantor today:

"Bank of Ireland: Return to Debt Markets a Positive
• Last week Bank of Ireland announced that it had raised €675m
through the issue of an AT1 bond with a coupon of 7.5% and a
maturity of 5.5 years, the first European bank to return to the debt
market since the virus hit.
• The bond was issued to refinance the current €750m 7.375% AT1
bond which is callable on 18th June
• Demand for the new bond was strong with demand double the final
issue size which represents a strong vote of confidence in the bank
from Debt Markets
• This positive reaction contrasts to continued negative sentiment to
the banks underlying equity which is trading at multi-year lows
• The renewed weakness in Bank of Ireland’s equity followed a
disappointing trading update last Monday which saw NIM contract
and loan demand weaken
• Bank of Ireland is currently trading on a Price/Book valuation of just
0.2 times, a near 50% discount to the European banking sector
• While the sector continues to face challenges such as negative
ECB deposit rates, negative band yields and sub-trend economic
growth, this vote of confidence from the debt markets is a positive
development
• This was reflected is an uplift in the share prices of both Bank of
Ireland and AIB Group and while broader macro risks remain, this
positive development should offer support the equity of the two
main Irish banks "

Taken from todays RTE Brokers Reports.

"Bank of Ireland AT1 sale vote of confidence from debt markets on balance sheet

Bank of Ireland yesterday priced up a €675m AT1 bond (PerpNC5.5, trigger at 7% CET1).
The coupon was set at 7.50%, semi-annual (MS+792.4). Having initially come at €625m in
size, it was upscaled to €675m with order books of €1.4bn, so demand >2x.
BOI had indicated that the new offer will be used to refinance its existing OpCo AT1 with a
mid-June call date. The existing €750m OpCo bond only partially qualifies for capital
(c.80%), so the new AT1 is a more efficient instrument for BOI and investors get a similar
coupon. The pricing comes after the recent market sell-off and BOI’s AT1 new issue has
pretty much re-opened the European bank AT1 market, being the first such issue in c.3
months. Moodys indicated yesterday evening it has assigned a Ba2 (hyb) rating to the bond.

The coupon is fractionally higher than the prior OpCo bond, but a very good outturn
in these markets, but on a smaller ticket size, so we estimate a small saving of
<€5m through the P&L. Much more importantly, BOI fills its P2R with some hybrid,
supplementing and making its capital structure more efficient. Also, the scale of
the interest in the trade is a strong vote of confidence from the debt markets on
the credit/balance sheet.

Recommendation: Buy
Closing Price: €1.34 "

"Both AIB and BOI rallied by 47% over the past three weeks as speculation grew
about a government support scheme for SMEs. But AIB and BOI are now down by
18% and 14% respectively since last Thursday, just before the scheme was
announced, as total support for the economy of <7% of GNI* compares with
double-digit figures at other European countries. Also, since Barclays kicked off the
UK bank results season on April 29, UK banks are down c.8%. With the government
hand played for the time being, medium term targets under risk which is not a
surprise at all, and impairments still too early to call, its hard to see the banks
move higher through the Q1 IMS season with the risk they continue to drift in the
short term. Between the banks, we believe BOI is likely to hint that its FY21 cost
target is now challenging, if wealth business is likely to see a large negative swing
on fee income and its starting capital base is that bit lower than AIB into the
coming downturn, so fundamentally a preference for AIB into the IMS season.
However, AIB is getting hit on fears it is coming out of MSCI indices which is
muddying the short-term picture (announcement after the close on May 12th, day
of its IMS) with all changes effective June 1st. So, both may continue to struggle in
the short term. "

The following excerpt from Goodbodys (copied from Brokers Reports RTE) expands on Enfin's post today. It is quite positive on Irish Banks long term. Lets hope events bear this out.


"The scenario from the Department of Finance shows a potential downturn this year
which is deeper than that forecast by the Central Bank and ESRI recently. So, no
sugar-coating from the government! Our economics team notes that the 15%
contraction in domestic demand this year (and c.8% bounce-back in 2021)
compares with the 11% decline in 2009 and 17% decline over 2009-11. Our
economists also note the government expectation of a return to pre-crisis activity
by 2022 and whilst that may prove optimistic, it is probably realistic to think it may
be regained in four years, compared with 11 years post GFC. Whatever way you put
it, a deep recession is already unfolding and impairments are set to rise sharply for
the banks. However, the sharper potential recovery next year, the extent of
government support and lack of leverage and imbalances in the economy will see
the impact for the Irish banks substantially lower than the GFC (unlikely maybe in
other countries). As we have stated extensively in recent weeks, we believe capital
and liquidity levels are sufficient at the banks to deal with this downturn and
preserve the current share counts. Also, importantly, we note comments from a
senior civil servant (a department secretary general) over the weekend that the
government is assessing ways in which it can extend direct support to businesses.
We flagged this on Monday and those remarks were noted in a conference call we
hosted yesterday, so it feels to us like some sort of wider guarantees/SME
support/grants is coming soon which would help the economy and therefore
contain exposures for the banks. This would be important bearing in mind AIB is
trading on 0.20x trailing TNAV and BIRG is on just 0.16x. Watch this space!

"

"Irish Banks
Credit market at odds with recent equity underperformance

Irish bank equities have significantly underperformed over the past month. This ignores the banks’ much-improved standing relative to the last crisis, fiscal support announcements to date and a strong sovereign standing with the capacity to provide more support as needed. The point of this report, however, is to highlight that this equity underperformance is at odds with the relative performance by Irish banks’ subordinated bonds. Irish banks’ subordinated bonds have rebounded from their lows in mid-March, supported by credit investors’ comfort in banks’ capital headroom."

https://www.davy.ie/research/public/genericPage.htm?page=morning

"First modern sales of concentrate from tungsten mine

Maiden concentrate sales from the Barruecopardo tungsten project in Spain is positive news and marks an important point in the project’s development (Ormonde 30% share). At the same time, the news that mining progress has been delayed will defer access to good quality tungsten grades, which has a subsequent impact on timing of cash flows. This is unwelcome, although the group has sufficient working capital access in place. Net net, we think the update today is broadly neutral."

good article, positive on the price of tungsten going forward which is the key to share price increases. Patience is definitely a requirement when investing in tungsten shares.

"This arrangement leaves Ormonde Mining shareholders sitting on a risk-free 30% stake in this operating mine and puts a face valuation on Ormonde’s 30% stake in the mining joint venture at $19m, which works out at $3.5 per Ormonde share. "

There are 472.4 million shares of Ormonde in existence. I don't see how $19m divided by 472 million yields $ 3.5 per share as stated above. Surely it is $.04 per share. I really hope i'm wrong.

Extract from RTE Brokers reports today. (Goodbodys Morning Wrap.): "We continue to be positive on Bank of Ireland (Buy; PT �8.90) and see the CMD on June 13th as the likely near-term catalyst for the stock. We expect the CMD to provide a platform for BOI to frame its medium-term restructuring credentials, with the CEO, Francesca McDonagh�s vision for the UK business and the structural benefits from the IT transformation project at the forefront of investors� minds."

Taken from RTE Brokers Reports: "2017 results: meeting expectations Job Langbroek | Morning briefing | Read Important Disclosures Best ever production output and shipped volumes underpin how far Kenmare has come since its 2016 re-organisation. Moreover, this took place in a market for titanium feedstocks that continues to be positive without being overheated. Although a period of planned capital allocation has begun, it is underway at a time when substantial cash flows are present and debt levels are low and manageable. Overall, we think the group is in better shape now than for quite some time."

From Davy's morning briefing. (RTE Brokers reports.) "Market valuation lags recovery Caren Crowley | Morning briefing | Read Important Disclosures We are upgrading our forecasts and valuation for Kenmare Resources principally for higher product prices. Earnings at the group are recovering, aided by a stronger market but also improved execution. We believe the stock remains very undervalued."

Approximately 3.2 million shares BIRG traded today on the Irish Stock Exchange. This is equivalent to approx 96 million of the old BKIR shares. Closing price was € 7.40. An average days trading.

From RTE Brokers Reports 10th July: "Bank Of Ireland. H1 preview: easing of pension pressure to restore momentum Jul 10 2017, 08:25 IST/BST | Stephen Lyons | Morning briefing. Bank of Ireland (BOI) has underperformed the wider European sector year-to-date, and we expect that interim results (July 28th) will help correct this. In particular, we expect a stabilisation in the defined benefit (DB) pension deficit to extend the recent rally. In our view, the market-implied valuation of BOI does not appear to reflect the time-limited and value-enhancing nature of Temenos. We are raising our price target to €8.40 (28c excluding today’s share consolidation) as we assume that the Q1 margin momentum is continued"

From RTE Brokers Reports: "Daily Note Friday, 7th July 2017 News Earlier in 2017, the Single Resolutions Board (SRB) required all Irish banks to established a HoldCo in order to meet regulatory requirements to deal with future bank resolutions. Permanent TSB already has a HoldCo structure in place, and AIB is set to established one in Q4/17 or early 2018. Bank of Ireland has received High Court and shareholder approval for this new HoldCo company which will be called Bank of Ireland Group Plc. Management also intends to carry out a share consolidation too which involves a 1 for 30 stock split. This means for every 30 shares of Bank of Ireland’s existing ordinary shares, investors will receive 1 new Bank of Ireland Group Plc share in the new HoldCo. Total shares outstanding will reduce from 32.36bn to 1.08bn, which should help reduce intraday volatility in the stock. Bank of Ireland’s share price closed at 24c on Thursday evening and based off the 1 for 30 consolidation, Bank of Ireland Group Plc’s share price should open at €7.20 on Monday morning. Our 12 month target price will move from 27.2c to €8.16 as a result which still offers 13.3% Comment The new HoldCo structure will issue equity, senior and junior debt in the future which will be hit first or bailed in if the Group runs into financial difficulty ever again similar to the last financial crisis. Deposits will be held within the Group’s operating company and will be more senior and offer greater protection than the equity and debt securities issued by the HoldCo. Bank of Ireland is currently trading at just 0.85x FY17e Price/ Book, which is a 11.5% discount to the broader Euro Stoxx 600 Bank Index (SX7P Index) at 0.96x. We think this discount will close in due course and Bank of Ireland should positively re-rate higher over the coming months. We have seen a sizeable move higher in European bonds yields over the past week which is a supportive backdrop for European banking stocks. A little over a week ago, 10 year German yields were 0.22% and are trading 34bps higher this morning at 0.56% and have broken through key resistance at 0.50% in the process. Bank of Ireland is due to report H1/17 on the 28th July and the Group should report an uptick in new lending growth rates in Ireland, a small improvement in Net Interest Margin and further improvements in asset quality as consumer and business sentiment continues to improve while housing value have risen over past 6 months. Stephen Hall, CFA | Investment Analyst Bank of Ireland "

RNS out today gives further details.

Taken from RTE Brokers Reports (Davys) today which probably explains the uptick in price. "Ormonde. Ormonde issues construction contracts Jun 2 2017, 08:35 IST/BST | Job Langbroek | Morning briefing | 1 page(s) | Read Important Disclosures The start-up is very good news for shareholders, removing any lingering worry that the project would be deferred or materially delayed. The timing should also suit the tungsten price cycle far better than if earlier start-up had taken place. The management change will also ensure full focus on project implementation. We think the stock should now begin to reflect the value of the project much more fully"

RTE Brokers Reports. "Rapid approval of a 'Declaration of Urgent Occupation' is significant and positive progress June 28 2016 | Job Langbroek | Morning briefing The rapid approval by the regional government of Castilla y Leon of the ‘Declaration of Urgent Occupation’ signals strong support by the authorities and de-risks the timeline to first production. This is positive for the stock."