Davy Research

Davy Morning Equity Briefing


Market Comment

Draghi holds the line for now

Despite mounting evidence of accelerating eurozone growth, the ECB kept its monetary policy and guidance unchanged yesterday (December 14th). In an uneventful press conference, President Draghi outlined subdued inflation forecasts despite revising up growth forecasts “substantially”. This suggests that the ECB will be very slow to begin tightening policy, but pressure will build to abandon its open ended bond-buying commitment if the growth continues to outperform expectations next year.


DS Smith

Upgrading forecasts by 4% to reflect better demand; further upgrades likely as prices rise

The demand and pricing environment for the European corrugated market continues to improve. While volume growth is strong, it is pricing that really drives profits. Our current assumption of a 6% increase in box prices could prove conservative. Further upgrades look increasingly likely through 2018 and beyond. We remain very positive on the sector.


CPL Resources

SThree sees strong trading to November

SThree’s trading update is another signal of strong demand and momentum within recruitment markets across continental Europe. The UK and Ireland trends are broadly as they were for the first nine months of the year. Although Cpl has limited direct overlap with SThree, we consider this update as pointing to robust macro trends.


Keywords Studios

Acquisition of LOLA complements LATAM audio service line

Keywords Studios (KWS) has announced the acquisition of Localizadora Latam SC (LOLA) for US$1.03m. We see this as a solid addition to its LATAM audio service line, moving it to a market-leading position for Latin American Spanish games. KWS currently uses the services of LOLA to complement its other voice recording studio in Mexico, resulting in 40% of LOLA’s revenues relating to work from KWS.


Irish economy

Mortgage arrears continue to fall

Mortgage arrears data from the Central Bank show that the number of problem loans continues to fall. In Q3 2017, 90-day arrears fell to 6.9% of the outstanding stock of owner-occupier loans and 15.1% of buy-to-let (BTL) loans. Nonetheless, long-term arrears remain a problem, with the loan level showing that 20% of mortgage arrears cases are now at least five years behind on their payments.