Enterprise Inns Share Discussion Threads

[mechanical trader] 23/11/2012 02:47

ETI ENTERPRISE INNS

Chart breakout since results very bullish
on very high volume.



Longer term chart showing we have resistance at 94p (march) to
overcome and 97p (apr/may) resistance to overcome.

But on inspection of lower indicators their is still
plenty left in this stock. Just look at how low RSI is.

Looks a very bullish technical set up imo.

[jeffian] 22/11/2012 15:37

I'm slightly surprised at the continuing strong positive reaction to Tuesday's results as almost all the information had been flagged up in the August IMS. Surprised, but not complaining!

[mechanical trader] 21/11/2012 16:05

ETI ENTEPRISE INNS

Brokers Views and targets afer
yesterdays results.....

Enterprise Inns Broker Views
Date Broker Recommendation Price Old target price New target price Notes

21 Nov Oriel Securities Buy 73.75 - - Reiterates
21 Nov Deutsche Bank Hold 73.75 105.00 105.00 Reiterates
20 Nov Panmure Gordon Buy 73.75 87.00 87.00 Reiterates
20 Nov Deutsche Bank Hold 73.75 105.00 105.00 Reiterates

NORWICH & PETERBOROUGH BUILDING SOCIETY

[scburbs] 21/11/2012 12:12

Jeffian,

Yes, I expect you are right. The only debt buybacks they have done have been made for other purposes (i.e. staying 1 year ahead for covenant reasons).

So are they a zombie or a zero dividend preference share? Unfortunately they would be a zero dividend preference share without an end date!

Clearly some guidance on how much debt they think they have to pay down before they can return to being a normal dividend paying company would be useful!

[jeffian] 21/11/2012 11:46

To be honest, scburbs, I don't think they want to do it (#776). They see this long-term debt at fixed rates as an "asset". They have openly said before that they are sorry that market forces have made them concentrate on repaying cheap bank debt when they could have been buying in bonds at a huge discount (the 2018 bonds were trading in the 40's at one point) but I think the uncertainty around banks generally means that they will continue to focus their firepower there until the banks are out of the equation altogether.

[scburbs] 21/11/2012 11:45

I also enjoyed the comedy chart on page 39. An illustration of the impact of debt paydown on the market capitalisation of the shares.

Using their illustration the share price is set to double by 2015.

The share price may well double (or more), but this is a terrible illustration (i.e. assuming that just because debt has gone down by £300m the equity has gone up by £300m). Comedians!

[scburbs] 21/11/2012 11:39

Interesting to see the bond pricing being shown on the presentation. Currently the £190m 6.464% N securitisation notes seem to offer an opportunity as they have gone from 61.58% to 53.04% (the only fall in value).

Unfortunately they are 2032 notes, but if the company is going to show it is able to generate value for shareholders (but doesn't want to pay dividends) then taking out some of these notes seems a good way to do it as it will enhance NAV.

Whether they have enough spare financial firepower (they still have £115m bank debt to repay next year or £90m net of cash) to take out such long dated debt is, of course, a different question.

If they did do it then it would be a clear signal of confidence as it would indicate that they did think they had enough surplus resources to opportunistically take out long dated debt bearing in mind the significant shorter term obligations. Not sure how much they would get before the price moved up though.

[mechanical trader] 21/11/2012 11:20

Post 568 deals with growth.

[mechanical trader] 21/11/2012 11:17

Well if you like the other thread
feel free to post over there.

Im ok here.

But I have no objections to you posting
here bull or bear. Its for everyone.

Must say Im not keen on the other threads
header!.

[jeffian] 21/11/2012 11:16

I watched the analysts' webcast yesterday and I have to say I was disappointed by the Board's ambivalent attitude to dividends. Ted Tuppen entered 2009 saying he saw no reason not to pay one; he was reeled in by market sentiment and only later disclosed a bank covenant against paying anything. He then held out the carrot that early repayment of this 'Tranche B' loan was a priority, as without it 'there would be no restrictions on paying dividends' so, in confirming yesterday that the loan had indeed been paid off, he said...........absolutely zilch! Now there are very good reasons why they still may not feel able to pay anything but unless shareholders are given some guidance on where we are going, the supposition could be that we are in the ranks of the 'Zombie' companies which are being managed solely for their creditors.

FWIW, I don't think that's the case here and I would like to think that once the banks are removed from the equation entirely (as they are planning to do), the remaining stable debt structure of corporate bonds and amortising loans will enable them to pay something to shareholders again. I wish management would be more open about their intentions here.

[jeffian] 21/11/2012 11:14

I'm not sure why this thread has been revived rather than the later one.



The premise of the question in the header here ("Value" or "Growth"?) became redundant in 2008/9. The question now is whether it's a 'Recovery Stock'. The market's attitude to debt is still the over-riding issue so the later thread is probably of more relevance.

I watched the analysts' webcast yesterday and I have to say I was disappointed by the Board's ambivalent attitude to dividends. Ted Tuppen entered 2009 saying he saw no reason not to pay one; he was reeled in by market sentiment and only later disclosed a bank covenant against paying anything. He then held out the carrot that early repayment of this 'Tranche B' loan was a priority, as without it 'there would be no restrictions on paying dividends' so, in confirming yesterday that the loan had indeed been paid off, he said...........absolutely zilch! Now there are very good reasons why they still may not feel able to pay anything but unless shareholders are given some guidance on where we are going, the supposition could be that we are in the ranks of the 'Zombie' companies which are being managed solely for their creditors.

FWIW, I don't think that's the case here and I would like to think that once the banks are removed from the equation entirely (as they are planning to do), the remaining stable debt structure of corporate bonds and amortising loans will enable them to pay something to shareholders again. I wish management would be more open about their intentions here.

[mechanical trader] 21/11/2012 10:24

21 Nov Enterprise Inns PLC ETI Oriel Securities Buy 72.50 Reiterates

[mechanical trader] 21/11/2012 10:09

Enterprise Inns plc (ETI)06:32 ET Nov 20, 2012Analyst Comment by Numis Securities

Numis Securities reiterates Buy rating on Enterprise Inns plc

Enterprise Inns ( LON: ETI) 's stock had its "buy" rating reaffirmed by research analysts at Numis Securities Ltd in a report released on Tuesday.They currently have a $1.75 (110 GBX) target price on the stock

[mechanical trader] 21/11/2012 09:14

On a hummdinger of a move upwards.

[3dwd] 21/11/2012 08:59

ETI LN represents a great recovery play .. if all goes to plan ..these shares could be a 100p within a year .. or higher .. a very exciting UK PLC recovery stock ..

[mechanical trader] 20/11/2012 16:04

Numis Securities Ltd Gives Buy Rating to Enterprise Inns (ETI)
November 20th, 2012 - - by Tyrone Williams

Enterprise Inns (LON: ETI)'s stock had its "buy" rating reaffirmed by research analysts at Numis Securities Ltd in a report released on Tuesday. They currently have a $1.75 (110 GBX) target price on the stock.

Shares of Enterprise Inns opened at 66.75 on Tuesday. Enterprise Inns has a one year low of GBX 26.25 and a one year high of GBX 76.50. The company's market cap is £333.4 million.

Separately, analysts at Barclays Capital reiterated an "equalweight" rating on shares of Enterprise Inns in a research note to investors on Monday, October 1st. They now have a $1.45 price target on the stock.

Enterprise Inns plc is a United Kingdom-based company. The Company operates on one segment is that of leased and tenanted pub operator in the United Kingdom.

[mechanical trader] 20/11/2012 08:57

20 Nov Enterprise Inns PLC ETI Panmure Gordon Buy 67.00 66.75 87.00 87.00 Reiterates

[mechanical trader] 20/11/2012 08:39

Management totaly focused on
Growth now and reducing the debt pile.

Could be a fantastic recovery stock
for 2013 imo.

[mechanical trader] 20/11/2012 08:05

20 Nov Enterprise Inns PLC ETI Deutsche Bank Hold 0.00 66.75 105.00 105.00 Reiterates

105p share price Target.

[mechanical trader] 20/11/2012 07:46

ETI ENTERPRISE INNS

THIS LOOKS LIKE A SIGNIFICANT
POLICY CHANGE................

FOCUSING THE BUSINESS ON GROWTH



In order to secure the path to earnings growth, our operational teams are focusing on four key differentiating activities: enhancing the quality of the estate; attracting and retaining the right publicans; providing exceptional local support and selling in smarter ways to optimise income.



Enhancing the quality of the estate



Sometimes changes in the local market conditions for a particular pub can be so severe that even the best publicans cannot generate a sustainable level of return. In such circumstances the appropriate outcome is to work with the publican to identify alternative opportunities for them whilst our Property team work to optimise the alternate use value of the asset. This churn removes the unsustainable element of the estate and generates cash proceeds from disposal that can be used to repay debt or invested in the core retained assets to optimise their income potential.



Over the next three years we expect the estate to reduce to approximately 5,200 pubs. Over the same period we plan to maintain our level of investment and spend approximately £180 million to improve the quality of our estate. In the recent past, a significant proportion of our capital expenditure has of necessity been defensive in nature ensuring basic functionality is in place to enable a continuation of trade. Looking forward we plan to direct an increasing proportion of our capital expenditure on growth driving activities, where appropriate repositioning pub businesses to meet the changing needs of their local customer base.



Attracting and retaining the right publicans to the Enterprise offer



Identifying, recruiting and supporting well-funded, quality publicans are critical success criteria for our organisation and we plan to reinvigorate the current suite of agreements that we offer. Quality pubs, together with attractive and flexible agreements, will attract the best talent and allow entrepreneurialism to flourish within the pub industry. We have many highly successful pubs and publicans, frequently acknowledged for their quality and contribution to their communities. For example, in 2012, the Royal Oak Inn in Appleby-in-Westmoreland was recognised as the UK's Best Leased and Tenanted pub in the annual Great British Pub Awards.



A change of publican can be the catalyst for revitalising and securing the prospects of a pub. A seamless transition from one publican to another is always the preferred outcome for publicans, their customers and ourselves. However, in recent market conditions this outcome has sometimes been difficult to achieve. Even the best publicans may need our support to tackle the multiple challenges of declining consumer confidence, increased overhead costs, the burden of punitive increases in taxation and the high cost of regulation. In an attempt to prevent outright failure we have therefore continued to provide temporary concessions to publicans where appropriate, and have seen this cost reduce from £15 million last year to £6 million in 2012. Some of this reduction has been embedded in amended terms for good publicans because we acknowledge the permanent nature of changes in the market within which they operate. However we have also removed concessions where it is clear that a change of publican is the best outcome for the trading prospects of the pub.



Another cost associated with business failure is the bad debt that may arise on the departure of the publican. It is reassuring that the underlying cost of bad debt in the year has reduced to £1.3 million (2011: £1.5 million), with the level of overdue balances also down to £4.0 million (2011: £5.0 million), representing only 0.6% of turnover.



Our approach to the tie has continued to evolve, and free-of-tie options for bottled beers, ciders and flavoured alcoholic beverages ("FABs"), wines, spirits and minerals, gaming machines and guest ales are available in every new agreement. Where circumstances have been compelling to both parties, we have been able to agree completely free-of-tie terms. This suite of available options ensures that all publicans' needs can be met, whether at the time of a new agreement, or in order to sustain and evolve an existing relationship.



Our evolution of the traditional pub tenancy agreement, developed and trialled successfully as part of Project Beacon, has been further extended during the year. A greater level of direction and support from us provides both experienced and inexperienced self-employed publicans with the opportunity to work with us in a new and innovative way. Our comprehensive support packages include flexible start-up arrangements, industry-leading training, upweighted marketing support and strong financial discipline. Our regional managers provide commercial insight and work in partnership with the publican to develop the most appropriate retail proposition to compete sustainably in the local market place.



We have increased the number of outlets operating under the Beacon format to 254 (2011: 90) and are encouraged by their results. They are typically smaller, wet-led pubs with an average net income of around £35,000 but which have delivered significantly improved net income when compared to the three months prior to conversion. Aligned with our successful disposal programme, we believe there is a natural limit to the number of our pubs that would benefit from this particular product offer and method of operation and now anticipate a total population of around 300 pubs to operate to this format. We are extending the lessons learnt from Beacon to develop other concepts where food, sport or family are the more central elements of the pub offer, and we already have one trial site successfully operating a carvery concept.



Selling smarter



Our Commercial team, under the guidance of our new commercial director, has developed our thinking to optimise income by selling in smarter ways through our product offer, our pub offer and our service offer.



· Product offer



Development of our product offer will include initiatives to extract greater value from the increasing importance of food, entertainment and technology to the appeal of our pubs in their local markets. We are progressing our e-commerce plans to enable online order capture which will enhance our capability in product up-selling and tele-marketing. Key to the development of the product offer is our relationship with suppliers which continues to be strong. We will work with our suppliers to identify margin growth opportunities and target product mix and innovations that bring benefits to our publicans and to our income.



· Pub offer



Alongside our product offer we already provide an extensive range of marketing support activity to our publicans to allow them to service the demands of their customers and to compete effectively in their chosen market. For example, in cask ale, which now represents 19% of all beer sales volumes, we source 1,520 brands from 457 brewers, including 437 members of SIBA, who deliver their products directly to participating pubs, maintaining important relationships between local producer and publican and enabling our pubs to differentiate their drinks range from their competitors. We are implementing quarterly marketing campaigns that are events-led and category focussed which are supported by comprehensive marketing materials, the resources of our partner suppliers and of course our own regional teams.



· Service offer



Our training solutions have recently been enhanced to include a "Building your Business" programme which is designed to enable existing and new publicans to improve footfall and spend per head. Further training was provided in such areas as social networking and media marketing skills as well as more traditional business management activities.



We provide a wide variety of support packages to ETI publicans enabling them to secure essential services which are both cost-effective and legally compliant. Our Health & Safety Management Solution, heating, cellar cooling and boiler maintenance packages have now been taken up by thousands of publicans at a cost materially less than would be available in the open market. We continue to utilise our purchasing leverage and organisational capabilities to access beneficial purchasing terms for dry goods, consumables, utilities and other merchant services, securing significant savings for our publicans.



During the year we concluded a trial of Vianet iDraught bar management systems in our pubs, providing real benefits to publicans in controlling pouring yields, beer quality and cost management. We have subsequently made around 450 installations of the iDraught system into our estate in the year, alongside which we are also increasing the provision of EPOS Smart Till systems, where appropriate.



Exceptional local support



Our regional managers are at the core of the commercial relationship between us and our publicans and during 2012 we have invested in additional resource to enable these teams to spend more time directly engaging with our publicans in order to understand their needs and to help provide business building solutions.



At a time when the role of great publicans at the heart of their community has never been so important, we also set out to recognise the many publicans who add so much more to their communities than simply serving quality food and drink. We are investing £1 million over the next ten years to fund our Community Hero Awards which have been established to celebrate the contribution of publicans who have such an impact on the fabric and cohesion of their communities. From the many deserving nominations throughout our estate, 18 regional awards were made, and the national award for 2012 was presented to our publicans at The Hare Inn in Leighton Buzzard, who proved to be community heroes in so many different ways, organising local events to benefit veterans and the homeless, and inviting local teams, clubs, committees and other groups to use the pub as a regular meeting place.