Fuller Smith & Turner Share Discussion Threads

[darrin1471] 12/9/2022 15:03

Youngs target premium customers in premium areas. The price and quality they offer works in those locations. Other locations will need different price points and offers.
Its an interesting question as to why Youngs have done better since covid.

As I have said previously, Youngs may be better run or have been better suited to covid recovery. Youngs may be a better 10 year investment.
For me, I am looking for the best 6 month investment and therefore those who have fallen the most and who are most likely to benefit from increased November and December sales show the greatest upside potential.

[essentialinvestor] 12/9/2022 15:01

Darrin, Youngs are still predominately wet led,
they may need to further pivot towards food going forward with changing drinking habits
- although you could make a case there will just be fewer pubs around, so less competition.

If Fullers make around £26 Million on pre tax in the FY, the current price gives
a multiple of 15 x approx. Is that achievable?, not sure with recession looming large.

[darrin1471] 12/9/2022 14:48

EI. Was suggesting Youngs increased sales may be due to the food they offer compared to other pubs.
Remember pubs were initially limited to table service only with minimum gaps between tables.
4 FSTA pubs near me are city centre or tourist pubs and the most likely to be under performing.
Youngs and CPC are not in my area so I do not know if they are the type of pub which would have lost wet trade as punters were unable to stand around the bar.

[essentialinvestor] 12/9/2022 13:31

Darrin, is that not a future trend with less people drinking alcohol in the UK.

Food will be increasingly important?.

Pubs competing with restaurants and cafes, as happens now, just more so.

[essentialinvestor] 12/9/2022 13:00

At their last respective updates Fullers reported current like 4 like revenue
up around 2% on 2019, Youngs reported revenue Up 17% on 2019 - that's a huge difference - those figures are from memory without double checking.

[essentialinvestor] 12/9/2022 12:55

I added to YNGN last week.

Fuller's also has 2 tiers of shares, but unlike Youngs they are unlisted.

Youngs had 3 tiers of shares back in the day, the C shares were rolled in
to the A shares circa 2005, from memory.


A pretty brutal winter ahead for pubs, with significant sector closures.

[darrin1471] 12/9/2022 12:35

1tx. Any opinion on CPC and pub share price recovery in general?
I have been thinking all year that November and December 22 are going to be significantly up due to Omicron in 2021 and the timing of the football world cup this year.
Also believe JDW have been reporting lower beer/cider sales due to significantly lower prices and not lower volumes.

[1tx] 12/9/2022 11:20

A partial explanation for the better profits from Young over Fullers is that Young booked around £8m net profit from sale of the Ram pubs portfolio of tenanted pubs,making it only a managed pubs group;secondly I suspect that Fullers had to give substantial support to its substantial tenanted estate mainly in the form of rent reduction uring parts of the year.It is important to note that Young also has two tiers of shares.Voting shares and non voting shares.The non voters are in my opinion very inexpensive;the voters in which the wider Young family have significant interest rather less so.Both groups are well run and have a high quality estate.

[essentialinvestor] 10/9/2022 19:29

mk, the unlisted B shares give the founding families over 50% control of
total equity - at least from my understanding.

Why Youngs', who share many geographic locations with Fullers, now appear streets ahead in pre tax profit terms, I just can't explain.

[m_kerr] 10/9/2022 18:23

you make a very fair point EI and it's an important discipline to examine the shareholder register. the asset valuation also highlights how low the returns they make are, as even £40m EBIT would only be a 4% ROIC, which is what you make from lending money without lifting a finger. cashflows here are relatively low relative to that asset base, and the dividend / shareholder remuneration is paltry. and as you say the uncertainty or barriers to realising that freehold valuation probably explain the long term discount. but if you take a 10 year view and compare the returns from the bank (whilst promptly hiking mortgage rates NatWest seem to have forgotten to update their savings rate and currently pay me 0.3%), it's very low risk investing.

[essentialinvestor] 09/9/2022 12:37

Mk, aware of the gargantuan discount to NAV, but how would that ever be realised?.

The founding family would need to relinquish majority control.

Otherwise it's nice to look at but just that.

[essentialinvestor] 06/9/2022 13:58

Youngs appear to be trouncing Fullers in profitability, little wonder the SP
appears friendless.

[m_kerr] 31/8/2022 18:01

IMV at these prices this stock is a shot to nothing, with low debt, not far off £1bn freeholds, and no securitisation. mitchell's and butlers, as with FSTA, also trades at a n enterprise value of 50% discount to the freeholds. jd wetherspoon (strongest business model in the sector) is also fully asset backed nowadays.

as always it's impossible to call the bottom, but IMV the cost of living crisis has already taken such a huge chunk off these pub shares that it's now in the price. always difficult to see through these tough times, when you're bombarded with negative news, but even if these companies just tread water in the next year or two, they should be primed to benefit from potentially reduced supply thereafter.

[1tx] 13/6/2022 17:38

Yes the shares could get cheaper but with a NAV of £13.80 based on directors valuation of property & this includes a pro-rata valuation of unlisted shares this is almost an undervalued property company with a pub business attached!I expect in spite of challenges that the pub sector faces from wage increases,food energy prices etc going forward I expect improved profits,these figures are looking backward to a still covid affected trading period.I have further added to my holding.

[km18] 09/6/2022 14:33

Fuller, Smith & Turner (FSTA) posted FY results for the 52 weeks to 26 March 2022 this morning confirming a return to profitable growth with a strengthened balance sheet. Revenues recovered to £253.8 million despite being significantly impacted during the year by coronavirus related closures, restrictions and working from home guidance. Adjusted profit before tax returned to growth at £7.2 million. Net debt excluding leases was down to £131.9 million. Management announced a return to a progressive dividend policy with a proposed final dividend of 7.41p in addition to the interim dividend of 3.90p paid earlier in the year. Valuation is reasonable, forward PE ratio at 15.4x is top half for the sector. There is also further business recovery potential and share price recovery potential from COVID. But share price lacks momentum and is still in a 14 month correction. One to monitor for now...

...from WealthOracleAM

[m_kerr] 09/6/2022 13:20

well there we have it, i thought £900m conservatively, but FSTA have put in their results that their freehold estate worth 'just shy of £1000m'. NAV is £13.80 per share.

share price hasn't moved which is interesting.

[1tx] 14/4/2022 13:24

Re earlier comments on share structure.There are approx 61 million shares in issue across listed A shares & unlisted B and C shares when working out earnings,dividend & NAV per share.A & C shares both have a par value of 40p per share;B shares have a par value of 4p per share and count as one tenth of the value of A & C shares for purposes of working out earnings dividend & NAV but have one vote per share like A & C shares so give the holders effective voting control of the company.

[m_kerr] 04/4/2022 18:39

a point missed entirely by me was that the customers of FSTA are much better off than average which should bode well for sales. as investors it's easy to forget that in large areas of the UK that are poorer than average (south wales, north england etc), discretionary income is being wiped out as the cost of living rises faster than pensions, benefits and wages.

i still think many of their pubs in central london aren't viable any more, but i doubt they'd have any problem selling the freeholds which they own 90% of at premium prices.

[essentialinvestor] 08/3/2022 11:30

FWIW if you want exposure to this sector, YNGN may be the best option,
YNGN as opposed to YNGA.

Much better value to be had in the Youngs non voting shares,
YNGA is too highly rated.

[essentialinvestor] 07/3/2022 18:51

mk, remember when looking at the A shares
they are only onc class of equity issued by the company.

So basing a valuation nf these alone only tells part of the story -
you may already be aware.

Company Sec can give you details if you want an exact clarification.

[m_kerr] 07/3/2022 18:07

this is really, really cheap now IMV. commercial estate agents are reporting pub freehold pricing is back to pre pandemic levels, yet this is priced barely higher than pre vaccine levels. the freeholds here are worth IMV around £900m conservatively (if valued in line with city pub group and young's), and are likely to be worth much more than this.

the company need to undertake regular valuations of their estate, if they did then the share price would probably double. there's no excuse really given that these are property companies.

[essentialinvestor] 07/3/2022 14:38

Youngs looks the better managed group?, respective recent result appear to
highlight this.

[essentialinvestor] 25/2/2022 14:33

marvel, moat welcome - Ian knows the sector better than me.

Watching JDW fwiw but not currently holding - the next set of sector updates look key with it being post any restrictions.

[marvelman] 23/2/2022 08:57

Jeffian/Essential Investor...appreciate your comments and clearly better knowledge of the share classes I had not picked up on due to my own inadequate superficial research. Many thanks.