Stock pick of the week: Irish Continental Group (ICG)
Published 27/09/2011 | 12:54
Irish Continental Group (ICG) is a leading shipping, transport and leisure group.
The Group operates through two divisions; Ferries (59pc of sales) and Container & Terminal (41pc of sales).
Superior cash flow characteristics, a low level of debt, leading market position, unique cost structure, potential for re-emergence of bid interest, undemanding valuation and scope for share buybacks or special dividend support our investment thesis.
While the freight market remains sluggish ICG should be gaining market share through the exit of DFDS. The group should experience decent operating leverage to any recovery in volumes.
ICG has the most modern fleet in Europe which will not need to be replaced for 5 to ten years, supporting cash generation. The book value of the fleet is also well below current market values.
The group currently trades on EV/EBITDA (2012) of 6.1x, PER (12) of 10.5x and a FCF yield greater than 10pc, very supportive metrics.
Moreover, ICG offers a dividend yield of 7pc, one of the best levels amongst ISEQ stocks.
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