PMI remains our TOP PICK

Post PMI and BPE earnigns last night we feel is Italy is on the mend.

Banca Pop Milano says loans to corporates up 5%YTD driven by the manufacturing and services.

First meaningful loan growth in 4 years.

And growing credit line utilisation pushed fees up 14% yoy.

At 1x book this stock is not priced for growth.

Banca Pop Emilia Romagna says “it is worth pointing out the continued positive trend in residential mortgages, which posted a 63.7% increase in new loans.”

The Italian economy has turned.

Banks look way too cheap!! We see 30% upside and remember mergers are coming.

See our original PMI BUY IDEA.


Pop. Milano U/G at MS. Its a good U/G

Tuesday • 15 July 2014 • 08:24

Pop. Milano Raised to Overweight at Morgan Stanley.

I think it is a good U/G. A name we like and have been looking at last few days. Feel they have been dragged down with the rest of the sector last week. For us they are the best way to play Italian banking sector. The fact that they are Milan based and essentially deal with professionals means they are leveraged into the good side of an improving Italian economy. Like the many other they are cheap on a BV metric.

Currently the government has a clause which stops any take over. Along with being leveraged into the best side of the improving Italian economy you also have the massive catalyst of the government clause changing( as many expect) and a takeover coming.