Monday 16 September 2019

Analysts tip homebuilders' shares for a 2019 rebound

Gene Murtagh named as best-performing CEO and Aryzta's Kevin Toland the worst in our annual survey of equity experts

Kingspan CEO Gene Murtagh has managed to keep the company’s share price broadly
stable in what has been a tumultuous year for Irish-listed companies
Kingspan CEO Gene Murtagh has managed to keep the company’s share price broadly stable in what has been a tumultuous year for Irish-listed companies

Michael Cogley, Business Correspondent

Irish equity analysts have tipped homebuilders Glenveagh and Cairn Homes to arrest their share-price slides and become the country's best-performing stocks in 2019, according to the annual Sunday Independent analysts survey.

Both companies suffered heavy losses to their valuation during 2018, with shares in Cairn plummeting by 44pc to €1.05 and dropping by 42.9pc to 67c in Glenveagh. Almost a third of analysts quizzed predicted Cairn to be the best stock next year, while 10pc picked Glenveagh.

Earlier in the year, Glenveagh's chief executive Justin Bickley robustly defended the company's slide in value, insisting that money was going to "different segments" and that it was "no view on the company".

Cairn Homes has continued to build and secure further planning permissions, with boss Michael Stanley lamenting the pace of office construction in comparison to that of apartments during a capital markets day presentation in November.

One in four analysts surveyed tipped troubled Swiss-Irish bakery Aryzta to turn it around in 2019 and to be the best Irish stock of the year, despite crowning the company's chief executive, Kevin Toland, the "worst CEO of the year".

In November, Aryzta completed a €790m rights issue to pay down debt and strengthen its balance sheet. The move caused hundreds of long-term investors in the business to lose 90pc of their stake.

When issued, the new shares cost around one Swiss franc, or 88c, significantly lower than the ChF9.34 it was trading at prior to the issue. Toland's Aryzta is also engaged in a legal battle in the US with Tennessee-based McKee Foods.

Elsewhere, 35pc of Irish brokers named Kingspan's Gene Murtagh as the best-performing CEO of the year, with real estate investment trust Yew Grove's Jonathan Laredo and hotel group Dalata's Pat McCann following in second and third respectively.

The Cavan-based insulation maker reported a very strong start to the year, with record-breaking revenue of more than €2bn in the first six months. Kingspan also posted a 10pc boost in profits, rising to €195.3m. Murtagh has also managed to keep the share price broadly stable in what has been a tumultuous year for Irish-listed companies.

Respondents to our survey - who were granted anonymity to encourage candour - also named Greencore's Patrick Coveney, Ryanair's Michael O'Leary, and Paddy Power Betfair's Jonathan Hill as among the worst-performing chief executives.

Coveney, second-only to Toland, received 30pc of the votes. He pulled the plug on the sandwich-maker's US experiment with the $1.1bn sale of its American business to rival Hearthside. Coveney insisted the deal would provide "real value" to shareholders but the company's stock price plummeted shortly after.

O'Leary's struggles with unions continued well into 2018, with numerous flights grounded due to strikes across Europe.

Analysts had vastly different expectations for the value of sterling at the end of 2019, with many of them citing the ultimate outcome of Brexit as a difficult factor.

The most common estimate was a strengthening of the Pound to 85p. On average, the analysts predicted the Iseq would improve next year to 5,982 from just over 5,300 last week.

Sunday Independent

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