CIARAN HANCOCKLooks at Bloxham Stockbrokers which in turn was looking at Paddy Power; the launch of Kalashnikov Vodka; Augusta's retail property project; Tiger Aviation's growth and the eastern fortunes of C&C

Paddy Power and Worldspreads considered safe bets

MAYBE IT was the feast of racing at Punchestown, but Bloxham was out of the stalls this week with buy calls on both Paddy Power and financial spread better Worldspreads.

On Paddy Power, the stockbroker compared racing results in the year to date with the same period in 2007 and liked what it saw. "Horseracing results are not too dissimilar to last year's exceptionally favourable run and [ we] believe upgrades to consensus earnings could come as early as next month's agm on May 15th."

For the record, 31.7 per cent of favourites won races in the first four months of this year, while 61 per cent were placed - in line with 2007. Bloxham said consensus earnings forecasts could go from 135 cent per share to 145-150 cent. It has a €27 price target on the stock, suggesting a 21 per cent upside.

On Worldspreads, Bloxham is the first broker to issue research on the AIM-listed Irish group, which is planning a secondary listing on the IEX junior market in Dublin on May 15th. It might have something to do with Bloxham negotiating to become Worldspreads' company broker. It uses Collins Stewart in London. With net cash of €9 million on its balance sheet, the broker said it expected Worldspreads to continue delivering on its "organic growth potential", which has seen its customer base increase tenfold since January 2006.

Financial spread betting is booming - gains are tax-free and no stamp duty is paid. Worldspreads executed 2,900 bets a day last September, compared with about 4,000 a day in the second half of March.

The risks include increased competition - Paddy Power has entered the market - exchange-rate volatility and liquidity issues. "The stock is only trading at 9.6 times our March 2009 earnings forecast, a 30 per cent discount to the sector," Bloxham said. It put a 130p price target on the stock, which is trading at 94p.

Kalash of the vodka titans

THE RUSSIANS are coming - in the vodka market at least. On Monday, floppy-haired billionaire Roustam Tariko spirited into Dublin to launch his Russian Standard brand.

Tariko is splashing out €3 million on the launch and wants a 10 per cent share of the vodka market by the end of the year.

Now comes word that Kalashnikov Vodka - chaired by the Russian general behind the AK-47 rifle - is planning an assault on the Irish market.

Kalashnikov's owners are believed to be holding talks with a number of Irish distributors about launching the brand here.

"We are exploring the opportunities in the Irish market," confirmed John Florey, managing director of the Kalashnikov Joint Stock Vodka Company in London, which holds the rights to sell Kalashnikov outside Russia. "It's tentative at the moment . . . it's about getting the right distribution and timing it right."

Florey hopes to float his company on London's AIM stock market in the next year. The privately-owned group is trying to raise £1 million (€629,000) for expansion and plans to tap investors for £6.6 million over the next three years.

At 88, Gen Mikhail Kalashnikov, a former Red Army tank commander, won't be leading the Irish charge from the front, although Florey says he remains actively involved in the business.

"We'd like to kick it off [ an Irish launch] towards the end of the year, but it's about getting the right distribution," Florey said.

Expect Diageo's Smirnoff brand, which controls about half of the Irish vodka market, to provide stiff resistance.

Flying Tiger to spread wings

SINGAPORE-BASED Tiger Aviation, which is backed by the family of the late Tony Ryan, looks set to spread its wings.

Chief executive Tony Davis told local media this week that the budget airline was in talks with six parties about a deal - either an acquisition or a joint venture.

The Ryans own 16 per cent of the airline through Irlandia Investments. Singapore Airlines is the biggest investor with 49 per cent.

Tiger, which operates out of Singapore and in Australia, did a roaring trade in its financial year just ended. On Monday, it reported a 50 per cent rise in passengers to 2.25 million for the 12 months to the end of March 2008. This was against a background of a 39 per cent increase in capacity.

It said its revenues for the year rose by 81.6 per cent, although it did not disclose figures. Based on 2007, however, this would suggest that Tiger's sales were 310 million Singapore dollars (€144 million).

Davis declined to say if the airline was operating profitably. Tiger lost S$14 million in 2007. "We've closed our [ 2008] financial year with our strongest cash position ever," he told the Sydney Morning Herald.

Davis ruled out an initial public offering for now. These plans, it seems, will remain grounded until stock markets take off again. The focus will be on rapid expansion of its fleet and the opening of a second base in Australia.

Augusta makes hay while the sun shines

CREDIT CRUNCH or not, Irish investment firm Augusta continues to raise money to invest in retail property in Germany.

The group, founded four years ago by Declan Kennedy, has spent €30 million this year on a handful of properties.

This includes a recent €8 million deal to acquire a retail complex in Wiesbaden.

Augusta put together a consortium of 11 Irish investors for the project. Each has ponied up about €250,000. Augusta has set a two-to-four-year timeframe on the investment and is projecting a tasty 21 per cent internal rate of return per year. It seems ambitious for a shopping centre with just four retailers, including Vodafone and warehouse retailer Tchibo.

German-born director Philipp Graf von Matuschka said negotiations on rent reviews were under way and it was looking at "squeezing in" a fifth shop. Despite the global economic turmoil, he is confident Germany can deliver.

"Germany seems to be relatively well insulated against what's going on in America at the moment. We're confident it's a good place to invest."

Ironically, Augusta picked up the Wiesbaden deal on the back of credit crunch-induced difficulties being experienced by the previous owner. "It's very much a question of making hay while the sun shines. We fully intend to keep this purchasing rate up throughout 2008 as we identify more undervalued property assets. But we're not going to get sucked into a buying frenzy."

'Na zdorovia' from C&C's Pratt to Russian drinkers

WHEN MAURICE Pratt sits down to pen his chief executive's review for C&C's 2008 annual report, he might want to title it From Russia With Love, judging by the sales performance of its whiskey and liquor brands there.

Figures provided to The Irish Times show that Russian Standard, which distributes Tullamore Dew, Carolans, Frangelico and Irish Mist for C&C in its home country, is projecting strong sales growth for 2009.

Owned by billionaire Roustam Tariko, Russian Standard expects to shift 25,000 cases of Carolans Irish Cream this year, compared with 16,236 in 2007.

It also expects to knock out 13,500 cases of Tullamore Dew whiskey, having sold 4,350 between May and December.

Sales of Frangelico are set to more than double to 2,400 cases, while its expects to shift a more modest 840 Irish Mist cases, up from just more than 500 in 2007.

Sadly, this stellar performance is unlikely to make much difference to C&C's anaemic share price as the spirits division accounts for just 14 per cent of group profits. A significant move upwards depends on the performance this summer of Magners in the UK. If only the Russians drank cider.