Morning Wrap Today ’s Newsflow Equity Research 03 Feb 2020 08:42 GMT Upcoming Events Select headline to navigate to article Ryanair Very strong Q3s. Raising our FY20 PAT by 5%. Company Events 03-Feb Ryanair; Q320 Results Irish Economic View Sinn Féin surges in latest poll 05-Feb Barratt Developments; Q220 Results Domino's Pizza Group; FY19 Trading Statement Irish Economic View Irish manufacturing returns to Frontier Developments; Q220 Results expansion territory Redrow; Q220 Results Rockwool; FY19 Results Smurfit Kappa; FY19 Results 06-Feb Cranswick; Q3 trading update Norwegian Air Shuttle; Jan20 Traffic Stats Supermarket Income REIT; H1 Results Economic Events Ireland 04-Feb ILO Unemployment Rate Jan20 ILO Unemployment Rate Jan20 05-Feb Industrial Production Dec19 Industrial Production Dec19 06-Feb Live Register Jan20 Live Register Jan20 10-Feb New Private Cars Jan20 United Kingdom 03-Feb CIPS Manufacturing PMI Jan20 04-Feb CIPS Construction PMI Jan20 05-Feb CIPS Services PMI Jan20 07-Feb Halifax House Prices Jan20 United States Europe This document is intended for the sole use of Goodbody Stockbrokers and its affiliates Goodbody Capital Markets Equity Research +353 1 6419221 Equity Sales +353 1 6670222 Bloomberg GDSE<GO> Goodbody Stockbrokers UC, trading as “Goodbody”, is regulated by the Central Bank of Ireland. In the UK, Goodbody is authorised and subject to limited regulation by the Financial Conduct Authority. Goodbody is a member of the Irish Stock Exchange and the London Stock Exchange. Goodbody is a member of the FEXCO group of companies. For the attention of US clients of Goodbody Securities Inc, this third-party research report has been produced by our affiliate, Goodbody Stockbrokers Goodbody Morning Wrap Ryanair Very strong Q3s. Raising our FY20 PAT by 5%. The company has reported stellar results for the December quarter (its Q320) with PAT at Recommendation: Buy €88m vs a loss last year of €66m including Lauda and loss of €20m clean (as presented last Closing Price: €14.90 year). This Q3 performance is despite the recent guided increase in losses at Lauda, with the FY20 loss forecast raised from €80m to €90m. Mark Simpson +353-1-641 0478 [email protected] The key takeaway from the release is that revenues per pax are surprising to the upside while ex-fuel cost control is in-line with guidance. As such, FY20 guidance has changed from rev/pax +2-3% to +3-4%, ex-fuel unit cost remains unchanged at +2% and fuel is €10m better with the yoy increase forecast at €440m. While FY20 PAT guidance hasn’t changed from the recent change to €950-1,050m, with the company still saying that current trends are to the mid-point, the impact of the Q3 result moves our FY20 PAT forecast from €1bn to €1.049bn. In terms of the Q3 headlines, scheduled rev/pax was +9.4% yoy (GBY forecast +5.4%), ancillary/pax +20.9% yoy (GBY forecast +14.1%) and total rev/pax +13.5% yoy (GBY forecast +8.6%); as such revenues came in €77m above our forecast at €1,906m. Fuel unit costs were +9.4% (GBY forecast +6.4%) and ex-fuel unit cost +1.5% (vs GBY +0.5%), meaning that total costs came in €28m above our estimate at €1,815m. In terms of other items, the net interest charge was much better at €11m vs our forecast of €22m, plus there was a FX benefit and tax credit that added €10m net. Overall this was a very strong set of results and highlights the positive momentum in yields that we think will continue into the peak summer months i.e. Ryanair’s H121. Home… This document is intended for the sole use of Goodbody Stockbrokers and its affiliates Page 2 03 Feb. 20 Goodbody Morning Wrap Irish Economic View Sinn Féin surges in latest poll Sinn Féin has seen a surge in its support levels in the latest poll ahead of this Saturday’s Dermot O’Leary elections. Rising by five points to 24% in the Sunday Business Post/RedC poll, Sinn Féin is +353-1-641 9167 [email protected] now tied with Fianna Fáil as the largest party in the State. Fine Gael meanwhile has continued to haemorrhage support, dropping by a further two points to just 21%. This takes the cumulative decline in support in this poll to nine points for Fine Gael. In contrast, Sinn Féin has seen a thirteen-percentage point increase. The message of change appears to be resonating among the electorate. Sinn Féin’s policies would represent a very significant shift to the left if they were to be introduced. They include a large increase in taxes for high-income earners, a radical increase in public housing output, a three-year rent freeze, the capping of mortgage interest rates and retaining state ownership of the banks. The final few days of the campaign will be crucial, including tomorrow’s leaders’ debate, which may or may not include the leader of Sinn Féin. At current support levels, there will be a hung Dáil following Saturday’s elections. The rise in support for Sinn Féin makes it almost impossible to call what the make-up of the next government will be, or, indeed whether there will be a need for another election soon after. Home… Irish Economic View Irish manufacturing returns to expansion territory The Irish manufacturing sector returned to expansion territory in January with a PMI reading Alexander Wilson of 51.4 following two months of contraction (49.5 in December, 49.7 in November). This also +353-1-641 9225 [email protected] marks the highest reading in 9 months. The uptick in manufacturing activity came as a result of an improvement in several indicators, namely, growth in new orders, output, purchasing and jobs. Meanwhile, export demand steadied amid reports of a stable US economy and improving UK market. As we have seen in the flash PMIs in the UK, there has also been a significant bounce in sentiment in Ireland, with the Future Output Index recording its biggest one-month gain in over three years. This document is intended for the sole use of Goodbody Stockbrokers and its affiliates In our latest Health Check, we forecasted an uptick in core domestic demand (from 3.3% in 2019 to 3.6% in 2020) off the back of improved sentiment and investment in the first half of the year, indeed, this morning’s PMI data comes in line with this view. That being said, as the UK and the EU move forward into the trade negotiation phase, we could see some degree of uncertainty return as the difficulty of the trade talk phase is realized. Nonetheless it is welcoming to see the manufacturing sector return to expansion territory. We eagerly await the service and composite PMIs set to be published this Wednesday. Home… Page 3 03 Feb. 20 Goodbody Morning Wrap Issuer & Analyst Disclosures Analyst Certification The named Research Analyst certifies that: (1) All of the views expressed in this research report accurately reflect my personal views about any and all of the subject securities and issuers. 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