Greene King Share Discussion Threads

[philanderer] 05/7/2017 16:59

Liberum note:

(ShareCast News) - Analysts at Liberum initiated coverage on UK-listed leisure stocks at 'neutral' despite recent strong growth in the sector as leisure operators slowly filled the vacuum left by retailers on the High Street.

Over the past five years, spending on drinking and eating out had rise by 21%, versus just 10% growth for doing so at home.

Pubs were still the preferred leisure establishment, but consumers had increasingly more choice and more intense inflationary headwinds were creating "operational challenges" for some, they said.

Socio-political uncertainty and lower consumer confidence were also likely to lead to tighter family budgets.

Hence, the broker said it preferred those companies who were offering "structural growth plays", outsourcing and travel hubs rather than High Street, that is, and those with the greatest pricing power and best cost levers to pull-through innovation, scale or synergy.

Liberum's top picks in the sector were Compass (buy; target: 1,850p) and SSP (buy; target: 540.0p) and Greene King (buy; target: 780.0p) for yield.

Mitchell's & Butler's (sell; target: 210.0p) and Domino's Pizza (sell; target: 250.0p) on the other hand should be avoided due to the structural challenges they would face, the broker said.

Merlin (hold; target: 515.0p) offered long-term value, but faced short-term headwinds which at this point in time outweighed the risks, while Elegant Hotels (buy; target: 125.0p) offered "deep value".

[philanderer] 05/7/2017 11:53

Liberum initiating coverage today with 'buy' and 840p target price.

[goingsolo] 05/7/2017 10:09

CEO still holding 600000. Maybe he was skint.

[jeffian] 05/7/2017 09:54

#943-955,

He was granted more options in February. I think execs just regard it as part of their remuneration package - get options, sell, pocket profit, get more options......

[ih_375993] 05/7/2017 09:45

Noticed Chairman now with Equiniti as Chairman in waiting.

[philanderer] 05/7/2017 00:23

I wonder why he kept those 73 ? :-)

[redartbmud] 04/7/2017 21:19

Doesn't appear to have much faith, does he?

[philanderer] 04/7/2017 20:57

LONDON (Alliance News) - Greene King PLC said Chief Operating Officer John Forrest sold 4,076 shares at a price of 648.51 pence per share on Tuesday.

Forrest also sold a further 2,136 shares at 647.55p each Tuesday. He now holds 73 shares

[jeffian] 04/7/2017 16:59

bend1pa,

There's no doubt that current bank interest rates are much lower and have lasted much longer than anyone expected, but there is a difference between short-term lending at variable rates, and funding very long-term investment over decades. Short-term bank finance can usually be called-in without notice and, of course, there is no control over interest rates once they start to move (as I, as a property developer, found out in 1992 when I completed the purchase of my biggest ever site in the week interest rates went up twice to 15%!). We used SWAPS for just that reason - that you know what your interest rates are going to be over a fixed period and you are not going to be caught out.

Almost all the pubco's use long-term bonds, usually secured against the pub properties, and they all seem to have the same sort of 'blended' rate around 6%. As bonds reach maturity, they are often renewed or refinanced to stretch out the repayment profile and average out the interest rate. In May 2016, GNK raised £300m at just over 4% fixed to 3035. You picked up your figure from the cashflow statement and you will see from that that £200m was used to repay (presumably more expensive) debt. I suspect (but am not 100% sure) that the 'payment on derivative liabilities' was to pay off the SWAPS that were no longer needed on the loans repaid.

[bend1pa] 04/7/2017 14:25

Thanks for your explanation jeffian. But that still doesn't explain why GNK doled out £117m this last year for 'payment on derivative liabilities' which didn't occur in the previous year.

Also fixing just over 6% in long term interest rates seems inordinately high when considering the record low interest rates the UK have had for about a decade now. 4% would be much more sensible as I believe low interest rates will be with us for many more years yet.

[philanderer] 03/7/2017 20:58

Investors Chronicle:

'Greene King warns of upcoming cost pressures'

[jeffian] 03/7/2017 16:19

I can't remember when the accounting rules changed, but the current treatment of interest rate SWAPS can cause confusion. Remember, the purpose of a SWAP is to fix interest rates so when a company buys an asset giving x% return, it can protect itself from rises in variable interest rates which would otherwise eat into their profit margin. In GNK's case, their long term finance is effectively fixed at just over 6%. The way a SWAP works is that you pay the provider if interest rates fall below an agreed rate and they pay you if interest rates rise above that rate, so in this case GNK know that they will never have to pay above 6%-odd even if the BoE rate rises substantially. In practice, interest rates have remained at an all-time low for an unusually long period, so at the moment GNK are paying more than they would have been if they had simply borrowed from the bank at a variable rate, and they are now obliged to account for that as a 'loss'. (If rates had gone the other way, above 6% it would have been booked as a 'profit').

[ih_375993] 03/7/2017 11:04

I wonder weather the big increase in Brits doing staycations and increased visits from the US,China and others will offset any consumer spending dips (if they happen) and leave this share looking cheap in a few months time. All the drops to date seem to be due to pessimism as opposed to results...and you know what they say.

[philanderer] 30/6/2017 18:20

Telegraph market report:

FTSE 250 pub giant Greene King dropped by as much as 6.75pc in intraday trade before paring losses during the after and closing 15p down at 673.50p.

Investors are still digesting the company’s trading update yesterday which warned that challenging conditions will intensify for the 218-year-old company. Panmure Gordon analyst Mark Irvine-Fortescue said that the company is “running hard to stand still” and its portfolio of “value tilted” assets, which includes Flaming Grill and Hungry Horse, is “arguably more sensitive to the tough consumer backdrop”.

[bend1pa] 30/6/2017 17:57

'30th june Canaccord buy tp 850p'
----------------------------------------
Not a cat's chance in hell of reaching that level within the next 2 years. Even 750 is looking optimistic now. Just seen the chart. For the first time in the current 5 year period the share price has under-performed the All Share. More worryingly the 50 day ma crashed down through the 200 ma in January and has not bounced. And the 200 ma has begun to make a sustained downturn for the first time in that period after a sharp climb until the new year. That tells me there is a much lower share price to come, probably sub 600 before too long.

[ih_375993] 30/6/2017 14:58

a bit to do to achieve that. Was up there last autumn.

[philanderer] 30/6/2017 14:39

An even higher one ...

30th june Canaccord buy tp 850p

[ih_375993] 30/6/2017 14:03

ben , it may yet end the day on the up...

[bend1pa] 30/6/2017 13:50

Well... a forecast rise to 750p + div from here would be decent enough in today's markets. Or have the brokers got it very wrong, judging by today's reactions. It wouldn't be the first time.

[philanderer] 30/6/2017 13:34

ih , like everyone else , about 50% of the time ;-)

[ih_375993] 30/6/2017 13:32

Interesting seems some experts comfortable/some not but both target around 750-770. New to this, how often do these guys get it right. Seems the market react to some and not others?

[philanderer] 30/6/2017 13:22

Broker Forecast - Barclays Capital issues a broker note on Greene King PLC

Source: SMW
Barclays Capital today reaffirms its overweight investment rating on Greene King PLC (LON:GNK) and raised its price target to 780p (from 770p).

Story provided by StockMarketWire.com

[philanderer] 30/6/2017 12:27

Greene King hit by JPMorgan downgrade


(ShareCast News)

- Greene King slumped on Friday after JPMorgan Cazenove downgraded the stock to 'neutral' from 'overweight' and cut the price target to 750p from 810p as it pointed to the absence of a compelling catalyst to cause a bounce-back.

The bank noted that cost headwinds in the pub sector - arising from the national living wage, the apprenticeship levy, business rates and higher costs of imported food and drink - are significant, adding that while it was integrating its acquisition of Spirit, Greene King had the chance to offset some of these pressures through the delivery of synergies. "The integration is now complete, but the cost pressures remain."

"With the risk that UK consumer spending will deteriorate in the months and years ahead, it is difficult to see a positive catalyst on the horizon," JPM said, highlighting the fact the shares have underperformed in recent months as cost pressures have intensified.

JPM said that with the Spirit integration now complete, the pub operator needs to work hard on other strategies to try to mitigate as much cost inflation as it can.

"This is no easy task," it said, noting that Greene King has guided to net inflation (post-mitigation) of £15-20m in FY18.

The bank cut its adjusted operating profit estimates by 3% to £407m in FY18 and 2% to £418m in FY19 to reflect a more cautious view on the impact of inflationary cost pressures.

[ed 123] 30/6/2017 11:15

ih_375993

You make good points.

Overall, it could be said that GNK is running to stand still. From here an important question is, 'How deep will any UK consumer slowdown be? And, what will be the degree of impact on GNK (bear in mind operational gearing and debt).'

There is a good dividend yield at the current market price and GNK may yet sail through these choppy waters, to reach calmer waters in a year or two?

In short, the future is unclear and the shareprice has fallen to reflect this.

(Sorry, I can't say where the shareprice goes from here.)