Marston's Share Discussion Threads

[zinos73] 30/5/2020 20:11

I’ve also been following this feed with interest and have also recently posted on the AML thread with great feed back.I have a few shares in MARS and after reading this thread and watching everyone flocking to the beaches of Britain lol I think that I am going to load up with a few more.

[sif12] 30/5/2020 19:58

SA is market money backing? shorts are closing...

[sif12] 30/5/2020 19:54

HI Alex, agree with Alan/SA. from their website ‘Fill or Kill’ is a type of order you can give to buy or sell at a specified price or better. If your order cannot be filled immediately, it will be ‘killed’ or cancelled'

Im not sure how immediate, immediate is. You may just want try a regular trade first thing. theres no RNS due. Dow finished basically flat which is good as there was fear it would fall, but didnt rise either, meaning FTSE and UK stocks wont race away...

SA I think the advantage is when you cant get the online quote you can put it through at potentially a slightly higher price and for a higher volume amount

[spartan attack] 30/5/2020 19:34

WHats the advantage of this order type alan?

[alan@bj] 30/5/2020 19:15

Alex - if you place a fill or kill order at 65p and the offer price only trades above that, the order would be killed (cancelled) after it expires. You have the option when placing the order to specify how long it should remain open. I would have said that if it drops below 65p then 65p is what you would pay but I placed a fill or kill sell order on GAN last week at $18.50 and HL achieved $18.95.

[spartan attack] 30/5/2020 19:00

I think fill or kill, is to buy both the price and the quantity you specify

If they cant fill qty at that specified price, kill the order - i 'think'

It does say on their site at price or better; so maybe it just applies when ordering a price below current price

Like a limit order i guess

To be honest, im only used to buy/sell/short/run haha

[alex7051] 30/5/2020 18:52

Evening guys.
I have been following this topic for a few days and am ready to invest.

I have been on the HL site and am looking at doing a fill or kill order.
Could anyone advise me on how this works - for example if I put a fill or kill in for 65p. When they try to do it if the share price is above 65p then the order gets cancelled. However if the share price is 60p for example- will I pay 60p per share or 65p per share.

Cheers

[spartan attack] 30/5/2020 17:51

Only one thing. Market money has got to back up the fundamental process. Always

[sif12] 30/5/2020 17:49

Thanks for feedback all.

Careful agree. Not nice but this may lead to a bit of rationalisation which should help achieve a better end product/ experience for the customer. I think the benefit of the Martson's partnerships/ self model is that if you have a local market understanding you can go it alone, and tailor your product, or ask for a bit of support as part of the partnership model

Any others with feedback please do say.. if Ive missed anything if the numbers are wrong etc.. Im happy to update. Ill then pin to Top.

Sif

[bashor] 30/5/2020 15:18

Thanks for the write up I think I’ll add to my holding here on Monday

[spartan attack] 30/5/2020 14:24

Good write up

"2020 is obviously going to be impacted by CVOID, however the advantage of the very unfortunate current circumstances for most businesses is that it has forced them to look at operations and efficiency."

Thats key. It also preps them for any future lockdowns too which is no harm. I would prefer them not to bring div yield debt to the business. They can stick to it being a value stock for another 3-5 years. Good value will bring in long term investors anyway - and traders for buy side dealing.

EPS forwards, many analysts have as negative projections. Thats actually good. Easy beat such expectations. EPS forward is currently 160p rel to share price - a sound target now that value is being seen. And expect share price to converge on that easily actually, in 2020

Not much more i can add. The short loan market is on the run. Good too.

A solid buy

[sif12] 30/5/2020 14:03

as its weekend, ive been doing some research etc.. write up in post above.. anyone around could you please have a read.. and give me any feedback- either points ive missed, financials you think are wrong/ missing, anything else to be included..?

thanks

[sif12] 30/5/2020 14:01

Summary:
•What it does- Pubs and Brewery business, over 1400 locations 93% Freehold
•JV deal- Deal with Carlsberg, gives Marston’s £273m cash, 40% stake and values ONLY Brewery business at £580m or 88 pence a share (still have all of 1400 pubs own 100%)
•Potential financials and why undervalued currently- Projections 2021 Free cashflow of over £150m. PCF 10 gives Mcap of £1bn or 150 pence. Resumptions of dividends in 2022 potentially 10 pence or over 15% current yield

Please read below for full details

What it does:
Marstons operates a chain of pubs/ taverns and a brewery business. You can drink, eat, stay at one of the over 1400 locations they have all over the country.

Joint Venture with Carlsberg- a game changer says Peel Hunt:
Marston signed a Joint venture agreement with Carlsberg announced on the 22nd of May. The deal means part of the brewing business, 60%, was effectively sold in a JV with Carlsberg, giving Marston’s £273m in cash and a 40% stake in the joint venture and valuing ONLY the brewing business at £580m or about 88p a share. Remember they have and keep all the actual operations- over 1400 pubs, taverns in addition to the Brewery business. This deal gives them access to Carlsberg’s massive network and an opportunity to introduce new beers and the increase reach of existing ones ie big uplift in Revenues.
Aside from a game changing deal, Peel Hunt said as much and have a 95 pence target (but I think this may be low as below), it means they have a much more secure base with £273m in the bank to weather any ongoing COVID challenges this year. There’s also the opportunity for synergy ie cost reduction.

Financials:
In 2019, Revenue of £1174m, Operating profit of £179m. Financials will show Net Profit of a loss of £18m, but this is down to non-cash adjustments, which don’t impact cash generation/ debt hence why they were able to pay a healthy dividend of 7.5 pence.

2020 is obviously going to be impacted by COVID, however the advantage of the very unfortunate current circumstances for most businesses is that it has forced them to look at operations and efficiency. Marston’s as per guidance on the 18th March has reduced capital expenditure by £80m, that’s massive. They should still be marginally profitable and have seen a massive increase in sales of their brands in shops. They also have the JV £273m to reduce debt, plus another £30m of disposals to complete. They’ve also agreed covenant waivers/ terms with banks and holders of notes.

In 2021 on the basis that there is a return to normal business by then, more than other type of business I think as long as lockdowns aren’t around, the weather is good and we aren’t in a deep recession Martson’s will do numbers similar to 2019 (for the record 2019 numbers should have been better if not for pretty wet weather).

So on the basis they lose 60% of the operating profit on the brewery (and not actually adding in any uplift in profits there from higher revenue and reduced costs, both of which are highly likely), if everything else stayed as-is we would be looking at

2021 Operating Profit = £155m (based on 2019, adjusted for reduction to brewery share)

But considering the ongoing £80m capital expenditure reduction we have
2021 Operating Profit = £230m (based on 2019, adjusted for Brewery and cap ex reduction)

Interest costs are consistently £80m (which should actually drop based on the £273m)

(I have NOT included non cash adjustment- these are not actual costs. and amount to £120m in 2019, and £<50m in 2018. in 2019 £70m of one off and the ongoing adjustment is impairment of freehold/leasehold assets).

We therefore have a free cashflow of £>150m

On a very fair forward PE of 7 that’s a Mcap of >£1bn or share price of 150 pence

On an EBITDA basis we would add back the interest and remove the freehold impairment.

EBITDA= £180m. The JV was on 13 multiple this would give us £2.3Bn MCap!!


If you want to use the ongoing likely non cash adjustment of £50m. We have Profit before tax of £100m. On a 7 x multiple thats £700m or an share price of £1+


This doesnt take into account any of upside of the Carlsberg deal either…

The above is all based on resumptions of normal trade next year. It seems certain now (save for a sudden rise in COVID cases all over the UK) that pubs will be allowed to reopen in July- with outdoor spaces to begin with.

Based on the above I believe £1 is fair value now with a target of 130 pence once pubs are fully open which should happen end Q3/ beginning Q4. Dividends should also return by 2021/2, and based on over 7 pence for the last few years and the higher earnings potential for 2020 could be 10 pence paid in 2022 or over 15% yield on current share price

Please DYOR

[john09] 30/5/2020 09:53

A good Monday expected

[john09] 30/5/2020 09:26

Great find Workshoppete


Mr Westwood said it was running its canning and bottling plant 24 hours a day to keep up with demand.

He said: “All of the volume we are producing is going to Burton for bottling and canning and we now producing about 5.5 million bottles and cans a week.

“Hobgoblin Gold, which is brewed in Wolverhampton, has been a real success. The week before last it sold the equivalent of three million bottles in just one week.”

Before the Covid-19 crisis of the beer brewed at the six breweries in the Marston’s stable, 53 per cent that went to the off trade was going to supermarkets.

“As the pubs have closed we have seen in the last eight weeks the volume being sold in bottle and can in supermarkets has increased by 50 per cent,” said Mr Westwood.

“To cope with the growing demand from the supermarkets in the last eight weeks we have had to change shift structures and train up a complete new canning shift in Burton. The canning and bottling lines are now running 24/7.”

[workshoppete] 30/5/2020 08:42

There was an article/Interview in the Shropshire Star last night about Marstons trade...…̷0;.

www.shropshirestar.com/news/business/2020/05/29/sales-soar-in-the-sunshine-as-beer-lovers-drink-at-home/ (use the https prefix)

[john09] 29/5/2020 21:16

Think we will see 80p next week for sure

[mintington] 29/5/2020 21:08

Yes happy with the way government are taking a very pro-active and measured resuming of hospitality sector...on the whole good news from chancellor....much more generous than expected...with Trump bottling it this pm...all points to good opening at 70 on monday and steady improvement over coming weeks...originally I was sceptical of £1 target....but I don't think there will be a major clawback on this share given recent carlsberg JV and we'll just run up the beanstalk...bwtfdik

[sif12] 29/5/2020 20:07

no thanks slinky

i think this is really good news.. most pubs have some sort of outdoor space right? most of marstons pubs are not in london- and from what ive seen doing a few searches theyre alll have outdoor spaces

[slinkyj] 29/5/2020 18:38

Not sure if this was shared yet, but looks optimistic in light of today's chancellor speech. Now environment minister George Eustice has confirmed food and drink venues like pubs and restaurants are likely to be able to reopen outdoor spaces first. It was not made clear whether a similar easing would also apply to Britain's cafes with outdoor spaces.He told Sky News on Friday morning: "The hospitality sector and some of those other ticketed venues, in particular cinemas and in particular theatres, restaurants and pubs, will face a challenge getting back in to operation."And that is why we won't be loosening the restrictions on them until at least July and even then it is likely that in the case of pubs and restaurants it will begin with beer gardens and outdoor areas only."

[slinkyj] 29/5/2020 17:26

Also being able to part pay toward furlough a month earlier ( July instead of August) is primed for businesses like bars and pubs. They can bring staff back part time and not shell out full costs to serve drinks and food etc for beer gardens in the summer when that gets approved . Absolutely fantastic news. A good north movement here Monday me thinks.

[john09] 29/5/2020 17:25

And a flexible furlough scheme from July where employees can work part time also great news. Means bars can basically pay for when they need people and govt will pick up the rest July and August