Davy Morning Equity Briefing

Jan 17, 2020

Market Comment

Irish CPI inflation picks up to 1.3%

Yesterday’s Irish Consumer Price Index (CPI) release showed inflation picking up to 1.3% in December. Excluding a temporary blip in April 2019, this is its strongest pace since 2012, driven up by a 3% rise in services prices – itself reflecting the pick-up in wage growth to 3.4%. This means price pressures will eat more into Irish households’ real incomes in 2020. Residential rent inflation slowed to 4.3% in December, the slowest pace since 2013.

GVC Holdings

Solid end to year

It is of little surprise that a stronger-than-anticipated (friendly results-supported) final quarter has resulted in a better-than- expected FY19 out-turn at GVC (pre-IFRS EBITDA to be at top end of £670-680m range, suggesting a c.1% beat versus consensus and our expectations). Online trading momentum remains strong (NGR grew by +9% in Q4). Looking forward, its ability to maintain current earnings momentum (we are unlikely to make changes to our 2020 forecasts, c.+15% year-on-year pre-IFRS 16 EBITDA growth, at this stage) and to make progress in the US (it reiterated its positive narrative in this regard) will be the key drivers of the equity thesis through 2020.