DAVY VIEW

Whether the poet Virgil is correct in the context of Irish Continental Group (ICG) will be somewhat dependent on the lifting of quarantines and some normalisation. However, ICG’s competitive position and balance sheet suggest to us that it will be a winner. Its robust performance, highlighted by its freight numbers on/off the island, are illustrative of its strategic importance. In this report, we publish our first post-COVID-19 forecasts, which show positive cash generation even in a ‘lost’ year for tourism but EBITDA dropping to €35m this year before recovering to €75m in FY2021 and €100m in FY2022. Net debt/EBITDA peaks at just <3x before rapidly declining below 0.3x by FY2022. Based on DCF, peer metrics and 12x EBITDA, we set a new price target of €5.50 and retain our ‘Outperform’ rating.