Enterprise Inns Share Discussion Threads

[cerrito] 16/2/2016 00:12

Tonight’s Evening Standard had a note saying Panmure Gordon has them as a hold with a £1 tp saying execution risks stop them being more bullish

[cerrito] 12/2/2016 23:51

Thanks Jeffian for that
I see Tempus in the Times today had an avoid and have just read a Cannaccord note produced after yesterday's update which has a valuation at 75p and see adjusted PBT being essentially the same between now and 17/18...also Javid apparently said earlier this week that tenants can ask for a MRO at rent review even if there is no rent increase.

[hybrasil] 12/2/2016 13:04

Thank you very much for a succint post.

The only answer is to wind up the shareholders but frankly I could not be bothered. Off to look for other assets.

[jeffian] 12/2/2016 10:35

Well don't buy on my account!

Meeting went as these things go. Only about 6 shareholders there (I think; hard to tell among sea of advisers and hangers-on). Trouble is most PI's sidetrack themselves and ramble on for hours about inconsequential stuff. The chap who jumped in before me went on about 'incentives' to visit the estate and see the pubs and eventually it turned out he was asking for some sort of discount voucher scheme like those run by GNK and MARS. Ffs, your shares are going down the pan and all you want is 20% off your pub lunch! Anyway, they listened politely to all the points I made in #684 et seq above but the answer was that they'd sold the new strategy to the main shareholders who were supportive and 'there is no alternative'. It's definitely going to be a long haul with no divi on the horizon. We are only in Year 1 of a 5 Year Plan, so don't expect huge short-term gains. Such 'value' as they can add is only likely to become accessible to shareholders later down the line when they have built what they see as effectively 'standalone' entities - Managed House retailers The Bermondsay Pub Co, and the Craft Union Pub Co, the (unlicensed) commercial property portfolio (which may, or may not, end up a REIT) and a core tenanted estate which will be reduced by 1000 over the 5 year term of the plan, either through sale or transfer to the managed pub companies. Those separate entities (they suggest) could then be floated off separately (a la Spirit) or sold to trade buyers at which point shareholders 'receive value'. Hmmmm!

If I were a younger man - I'm retired now - I suppose I may think it worthwhile to lock away 75p with no return in the hope it may turn into 150-200 in 4-5 year's time, but I might be dead by then and I need income in the meantime. Anyway, in current markets I think there are just as likely to be other opportunities to buy shares which will double over the period with less stress and a divi to boot. Horses for courses.

Finally, one shareholder did ask what the impact of a reduction in drink/drive limits might be (a la Scotland). Pretty disastrous, seems to be the answer, but Simon Townsend said the Government had indicated they had no current plans to change the limit. Mind you, that's what they said about the tie.......!

[hybrasil] 12/2/2016 08:53

My apologies. I kept hitting the wrong button.
Good to see the senior independent director buy 25K.
When we hear from Jeffian I plan to buy!

[hybrasil] 11/2/2016 08:34

Thanks Jeffian

Await with interest your report.

Will you ask the obvious question?

Whats in this company for the people who own it?

[jeffian] 11/2/2016 07:35

Not sure that 1.6% L-4-L growth (which isn't the same as revenue growth as the size of the estate contracts and overheads increase) answers Barclays point which was mainly about debt levels and execution risk. The success or otherwise of the new strategy lies in share price performance - it's no good creating "shareholder value" if shareholders can't access it and meanwhile every £1 of our cash 'invested' in the new estate model immediately becomes 30p while the shares stand at this discount to NAV.

I shall be attending the AGM today and report back.

[cantrememberthis2] 11/2/2016 07:23

Like for like growth of 1.6% over the last 19 weeks. Barclays Analysts go jump!

[eastbourne1982] 10/2/2016 23:21

Forget 20 years ago, these were around 25p just 4 years ago from which point they 6 - 7 bagged within 2 years !! Irrational of course but hey this is the stock market.

I have no position here however I will be tempted at some point, when that is I haven't got a clue given the state of the markets.

[hybrasil] 10/2/2016 22:55

Will it reach 55p though?

[lefrene] 10/2/2016 12:01

Quantative easing has been cut back, liquidity in the banking system is shrinking and businesses dependent on high leverage will be at risk of facing higher finance charges. If finance charges rise then the capital value of financed assets will likely fall, thus creating the proverbial perfect storm. The share price is reflecting this possibility, though I doubt many people would have expected the share price to be back where it was 20 years ago.

[hybrasil] 10/2/2016 11:16

Yes Mike

There is only one way to realise value here but you need 50% or more practically £200 million to do it!!!

[mikepokerface] 10/2/2016 09:37

Enterprise Inns woes are perhaps rooted in a lack of confidence the market feels in the senior management team to execute their strategy. It seems a fundamentally sound business let down by management with divergent goals to shareholders.

In the year to 30th September 2015 the CEO and Finance Director managed to double their remuneration – to £1.6m and £1.4m respectively - for reducing net profit from £30m to a loss of (£65m). The words gravy and train spring to mind.

Shareholders don’t have the luxury of being able to ignore such inconvenient truths as a write down in the value of the estate following a long over due independent valuation – and neither should directors’ remuneration packages. Everybody should be singing from the same hymn sheet.

But if shareholders let directors get away with it can you blame them for carrying on drawing huge cash reward irrespective of delivering shareholder value. Turkeys don’t vote for Christmas.

Further evidence of self-interested management was added with the CEO and FD selling 338,000 shares between them in January 2016 – not helpful to shareholders and surprising with an AGM and trading update on Thursday 11th February – perhaps though there will be some amazing good news to share?

Somehow I doubt it – more of the same old gravy train likely

[timbo003] 09/2/2016 21:28

Not good for English wet led boozers:


According to the tenant (who is Scottish) in my (wet lead) pub, the experience in Scotland under the new limit is is that they now drink less in the week as they don't want to be over the limit on the drive to work the next morning, although weekend trade is relatively unaffected.

[hybrasil] 09/2/2016 11:46

AGM day after tomorrow coupled with a trading update. Directors restricted till then. Interesting to see if they buy shares at these levels. I started looking at 90p. Down 17.5% since. I'm a buyer at 55p

[hybrasil] 08/2/2016 20:14

Jeffian

I read the annual report.

Extremely long winded. Very worrying that they could not manage the "expert managed" themselves. I have worked for publicans all my life and simply I could not see that happening for any of them that I know.

I looked at the figures again and if you allow for the costs of sale and getting rid of issues at around 10% you might end up with £1.50 a share.

Thats nearly double the share price though.

The one plus is that it does not have a significant pension liability.

It has a very expensive board.

I think it could fall further over the next few days and I will consider a punt if it does

[hybrasil] 08/2/2016 14:02

Sorry Jeffian. I should have read the thread.
Following your post I have read the detailed RNS's on holdings on the companies website. They are impossible to understand. Goldman Sachs has been playing with all sort of instruments ( and I dont mean the clarinet). I suspect (but will have to do a lot more reading to work it out) the major shareholders are bondholders and therefore are quite happy to continue the status quo.

I see Glenview Capital Managment LLC (who I will now go and research but I think are ahedge fund own 12%.

I certainly think there is fun to be had as an activist investor (but I hav'nt yet invested!)

[jeffian] 08/2/2016 12:23

I agree with you, hybrasil. It's the solution offered in my 684/691 and one I plan to raise at the AGM.

Why only 140p? NAV is 242p. I accept that there's a few intangibles etc in there, but not £1/share surely?

I don't agree with you and Barclays about refinancing. This has always been held over ETI's head despite the fact that they've paid off most of their bank loans and showed that they could refinance a chunk of the 2018 bonds. With interest rates set to remain on the floor for the foreseeable future and bondholders continuing to be offered the security of ring-fenced groups of freehold pubs, what's not to like? Better than peer-to-peer lending, surely?!

[hybrasil] 08/2/2016 11:03

I have just read back through the last five years of results and I cannot work out the reason for the rise in the companies share price from late 2011.
The one thing that is clear is that the only people who have done any good here is the bondholders.
They in addition to their annual payments got an 8% uplift on the last redemption.

Barclays are in my opinion right. They could find it find it difficult to raise money.

If I were a substantial shareholder I would want to know how I was going to get value for my stake. I think they have to do one of two things
a) Get rid of debt entirely. Slim down massively the management. You will then have a company that could comfortably afford a 5% dividend yield with retained cash for expansion.
b)My preferred option. Sell everything. The shareholders would on my back of the envelope calculation get £1.40 each.

Any one have any other thoughts?

[hybrasil] 08/2/2016 08:55

Jeffian
Excellent post (as always)

I too am watching attracted by the assets

[cerrito] 07/2/2016 22:32

Thanks Jeffian and I missed the Barclays downgrade.
Look forward to any comments you can share with us post AGM