Marston's Share Discussion Threads

[the deacon] 13/4/2018 10:37

GNK back around £6 soon imo. Should see MARS back to 120-130 range - provided the next TU isn't catastrophic

[brwo349] 13/4/2018 10:34

GNK up another 4.7% today

[jeffian] 13/4/2018 10:32

#2642,
SQ, "brewery assets" are mainly pubs which have been proven time and again - even through the dark days of 2008/9 - to retain value well, be easily tradeable and in most cases have valuable alternative uses even when no longer viable as a pub. As for breweries, production and distribution facilities, these too have either inherent or development value (and I speak as a form brewery Property Director who redeveloped a whole town centre brewery into residential/commercial use as Young's did in London with the Ram Brewery at Wandsworth). As careful says, it's a geared property play - and rather less geared than most domestic homeowners! - but I don't think they'll get the market to give them a rating until they prove that they can pay down, not just service, the debt.

[septimus quaid] 13/4/2018 10:28

careful, many who loaded up with debt in the late 80s, and bought a property, found themselves on the street a few years later

[chinese investor] 13/4/2018 10:15

Looking Good !

110p Soon !

[careful] 13/4/2018 10:14

Debt can be a good thing.
ROCE, return on capital employed, used to be the key criteria.
All great companies have used leverage at the right time to get ahead.
Who dares wins.
How I wish I had loaded up with debt a few decades ago and bought some property.

[ny boy] 13/4/2018 10:09

bought a chunk this morning, sector back in fashion after GNK results, warmer weather coming too

[septimus quaid] 13/4/2018 10:00

A piece in today’s Telegraph Business section about GNK’s reiteration of profit guidance being “a blow to short-sellers who had been circling the group”

Maybe it caused a bit of short squeeze yesterday which contributed to GNK’s dramatic share price rise.

PS, thanks for the responses re debt, although I am not sure that debt raised against such vagaries as brewing assets gives me much comfort (try selling a pub/brewery in a hurry, other than a fire sale). After the CVR debacle, I’d prefer to see a dividend cut and debt pay down myself.

[jeffian] 13/4/2018 09:58

It is, though, a common perception in the market which is why the geared pubco's have such a low rating. I have been having this argument with EIG for years. They have been 'reinvesting' all capital from disposals into the estate and buying their own shares with 'surplus' cash rather than paying down debt or returning it to shareholders via a divi or return of capital. It doesn't matter what these companies themselves think is the 'best use of cash' if the market doesn't agree with them!

[brwo349] 13/4/2018 08:45

lol @ septimus. What a silly, misleading post. If you are going to quote the debt then at least quote the property assets the debt is secured on.

[ianood] 13/4/2018 08:28

Septimus - Although appearing somewhat highly geared , the debt is of a long term nature all hedged with IRS's and is primarily against their property portfolio i.e. put simplistically it is akin to a mortgage.
Market cap to debt in a reasonably well managed company merely indicates how cheap the shares are and analyst's poor understanding/expectations.

[jeffian] 13/4/2018 08:17

Absolutely, tim, and a lesson I learned very early in my investing life where, in my early days, I would scour the share prices then published daily in the papers for high yield shares, oblivious of the fact that they were based on historic earnings and dividends which may not be maintained. I think the first share I bought on my own was Freddie Laker's Skytrain........!

[septimus quaid] 13/4/2018 08:15

There's something that we just aren't seeing in the figures. MARS has been carrying quite a bit of shorting activity (which has been steadily ramping up since July 17):


Fund % short change Date changed
GSA Capital Partners LLP 0.50% 0.01% 5 Apr 2018
JPMorgan Asset Management (UK) Ltd 0.91% 0.10% 14 Dec 2017
Marshall Wace LLP 0.58% -0.08% 10 Apr 2018
OLD MUTUAL GLOBAL INVESTORS (UK) LTD 0.95% 0.09% 5 Dec 2017
Systematica Investments Limited 0.70% 0.10% 5 Apr 2018
Total 3.64%

Must be the debt levels, making everyone as nervous as hell:

Market Cap = £686m
Net Debt = £1,322m

[tim 3] 12/4/2018 22:46

jeffian

Agree with your post.

My comment was more a light hearted one.

However a high dividend can sometimes be a warning sign of problems ahead.

But is certainly not always the case,plenty of examples of companies doing well and still paying a good dividend the key is whether its sustainable and the cover is often a good indication of this along with looking at future earnings.

IMO

[spacecake] 12/4/2018 22:05

I see Marston's have been raising the dividend for the last six years while targeting 2 x dividend cover, management prone to mistakes so I doubt it will continue.

The new canning line cap ex is disappointing after stating that one of the reasons for buying the latest brewery business was that they had a canning line.

[jeffian] 12/4/2018 16:22

Ref: #2624/5, whilst an exceptionally high dividend yield can indicate that the market thinks the div is unsustainably high and will be cut, it's a mistake to think the div is a function of the share price. It's a function of earnings. As Septimus Quaid says, as long as the div is well-covered, it doesn't make sense to cut the div just because the share price is being hammered. Many years ago, when Aviva were still called Norwich Union, the company announced that because the dividend yield was so high in comparison to their peer group, they were going to "re-base" (i.e. cut!) it to bring the yield into line with their competitors. They halved the divi.....and the market promptly halved their share price so the yield remained the same!

Managements should focus on the things they can directly control - growing revenues, controlling costs, making profits and paying dividends - and let the share price look after itself.

[spacecake] 12/4/2018 15:59

Muted read across - yep, right on that one.

[brwo349] 12/4/2018 14:04

In for some more at this bargain price. GNK is now up 12.5% compared to MARS up only 2.6%. MARS and GNK are almost the same business.Gift horse, mouth etc

[brwo349] 12/4/2018 13:16

strong buy at this level

[brwo349] 12/4/2018 13:15

If there's a read across from the GNK results it's a very muted one. GNK are up 11.5% whereas MARS is not even up 3%. I think MARS looks a lot cheaper. Well worth holding this till the May results.

[cc2014] 12/4/2018 12:42

Nice to see the shorters getting fried on GNK. All other things being equal this should put support under MARS

[r ball] 12/4/2018 12:34

Gnk read across

[chinese investor] 12/4/2018 10:11

Much Better !

[jeffian] 12/4/2018 10:09

"GNK on track to achieve £240m profit, well up on last year."

Not exactly. Maybe "well up" on the Statutory PBT of £184.9m but "profit before tax and exceptionals to be in the range of £240-245m" presumably compares with last year's Adjusted Profit of £273.4m

[the deacon] 12/4/2018 10:02

Possibility of slightly more of a weather effect for MARS - given a bigger footprint in Northern areas?? GNK update encouraging and allaying many fears nonetheless