Marston's Share Discussion Threads

[m_kerr] 13/3/2023 17:06

jeff - the synergies are from combining carlsberg UK and marstons.

on a return on capital basis, scale brewing is far more profitable than running pubs. there's been alot of m&a and consolidation in the brewing industry, but time has shown the breweries to be far more resilient than the pub industry (and of those brewers that you listed, pretty much all of them still exist, though they've been sold, maybe more than once). they get to participate in the secular shift to the off trade, pubs don't.

fuller's sold their brewery because they got a knockout bid, something like 23 x ebitda as it is sitting on prime london land. brewing nowadays you need a degree of scale. at the micro end, there's tax breaks for being small, and the largest ones have the economies of scale. if you're stuck in the middle life is difficult as you have neither of those. that's why the industry has consolidated.

[darrin1471] 09/3/2023 16:09

Long term higher interest rates and bond rates has to result in a move out of equities for some and lower average p/e

[careful] 09/3/2023 15:18

Inflation all round changes everything.
Wages are higher, prices are higher. We nave been there before.

[darrin1471] 09/3/2023 14:54

My simplistic view.
If a pub has to pay rent they need to make enough profit in the good times to pay for the rent in bad times or go bust.
If you own your property you have an asset to borrow against in the bad times.
If you borrow against the property in good times you have less protection in bad times.
Many pub groups own their own properties with varying amounts of debt. As none of them are paying rent they were able to make small profits during an era of low interest rates. If they had had to pay rents the profits would have been a lot lower.
I think average interest rates for the next decade will be at least double the rates of the last decade. All pubs will need to raise prices to cover costs.
That presents opportunities to new entrants to open new pubs/bars with lower rents or cheaper property.

[jeffian] 08/3/2023 23:02

I think that's to completely misunderstand the business. Splitting the business into separate brewing and property entities isn't about "synergies", it's about realising some capital from the less profitable side and reducing debt. They should go the whole hog, sell the remaining share of brewing and leave themselves with an estate with lower debt. There is a lot of emotion in brewing (I've been there) but if you can buy beer from others cheaper than you can brew it yourself, what's the point of owning breweries? In its wisdom (idiocy) the Government decided to break the link between brewers and their pub estates via the 1989 Beer Orders. At that time, there were 6 major brewers (Allied, Bass, Courage, Grand Metropolitan, Scottish & Newcastle and Whitbread). How many of those brew now? And even among the smaller 'regionals', how many still exist? If Youngs and Fullers in London can't make it work, who can? No, MARS need to sell the rest of their brewery interests and buy their beer as cheaply as possible from others in the market. The trouble is that they haven't shown themselves particularly adept at running a pub estate either and, unlike others like Greene King, Fullers and Youngs, the majority of their pubs are not in the affluent SE but in the Midlands and North. Sell the breweries. Sell the pub estate. Give us our money back.

[m_kerr] 08/3/2023 17:26

i suspect marstons will have to sell it once (if) value is created through synergies. they are highly leveraged and need the cash. cash generation from the JV has been non existent thus far, it's proving much more difficult to generate value than they anticipated. there's no growth in the sector, the value is all in cutting costs from the two parallel businesses.

[jeffian] 08/3/2023 10:40

I see the retiring Carlsberg CEO has said he wishes he had bought more craft breweries but now they have the resources to buy, there aren't the opportunities. Well he could buy out the other half of the Marston's brewing company for a start!

[southernsong] 06/3/2023 22:38

yf23_1 - the news of the deal with Carlsberg was first announced in 2020. I bought the shares within a few seconds of the RNS hitting the market mid-session: it was a nice wheeze. See the original RNS and updates since.

I've been holding again more recently for a longer spell, buying the dips since late autumn '22 and, as stated, adding on the recent retrace.

As noted on Friday, some decent purchases are now cropping up here again. I was more than satisfied with the last trading update....any whiff of momentum into the traditionally weaker calendar Q1 should bode very well imo.

[yf23_1] 06/3/2023 19:28

Just noticed Marstons new classic beer selection 6 bottles now says Carlsberg Marstons.
What's the association - just distribution, a joint venture ...?

[hugh garss] 06/3/2023 17:08

Order for 239k shares has just gone through (not mine), I'm off for a pint :)

[waspfactory] 03/3/2023 13:05

Greene King's agreed takeover by CK Asset Holdings marks a continuing interest of Asian giants in the UK brewing sector, after London Pride owner Fullers sold its beer-making operations to the Japanese company Asahi in January for £250m.

[southernsong] 03/3/2023 12:56

A number of decent sized buys arriving at last.

Good to see.

[southernsong] 03/3/2023 12:50

We've been adding (not selling) MARS just recently.

Away from the all the 'noise' on these bulletin boards and talking to real people with real money, whenever MARS has entered the conversation the general consensus has been around adding (and when) and not selling.

Good luck.

[waspfactory] 03/3/2023 07:59

Greene King was sold to a Hong Kong based property company, MARS likely to go the same way imo. Happy holding :)

[porsche1945] 02/3/2023 01:10

Another terminal leisure company with eye watering debt. If you didn’t dump this at a quid well you had your chance.

[darrin1471] 24/2/2023 10:31

If you don't own the property you need to pay rent.
Rent is more expensive than interest payments over 30 years.
In hard times owning the property protects the business from failure as you do not pay rent and you can borrow against the property.
What tends to happen in good times is that investors load up the company with debt then move on leaving the debt behind.
You end up owning a property business rather than a pub business.

[rightnellie] 24/2/2023 10:05

Couldn't resist a pint or two at this price. Hopefully just a dip before it returns to an upward path again

[jeffian] 23/2/2023 23:04

There's a lot of guff talked about pubco's and debt. It's no more "unsustainable" (and a lot better, in fact) than the average mortgage and the likelihood of MARS coming to a sticky end after several centuries of operating this business model is negligible IMO. You may accuse it of being a 'zombie company' (one which can stay alive but not thrive) - and I probably do - but it's not a very challenging target to meet its overheads and interest payments.

However, let's get the figures right. careful, the interest rate is not hedged at 1-4%. The relatively minor part of bank loans etc may be but the majority of the debt lies within the securitisations and these are paying out around 6.5% on average (though MARS go out of their way not to state this figure specifically and you have to dig around a bit). Have a look at Note 21 on Page 142 of the annual accounts . Their interest payments are running at over £90m pa, not £37m.

Here's the plan: sell the rest of the brewing business to Carlsberg; sell the pub estate; give us our money back. Job done.

[simmsc] 23/2/2023 02:44

Too right, careful. Precisely why I'm holding too. Strong hold and add on dips.

[careful] 22/2/2023 17:48

I think the debt and covenant situation is critical here.

Last years net debt was £1,232 million, with a stated target of getting it down to £1bn.
I thought last years results were promising with revenue at £799.6m and positive cash flow of £26.2m.
Underlying profit was £27.7m but because of factors such as interest rate swap gains and a reversal of an impairment the profit was £163.4m.

The interest rate paid on the debt is secured by the assets (last years value was £2,100m.)
The interest rate is hedged and is 1-4%.
So if we assume (say) 3% then the annual cost of debt is £1,232m x 3% = £37m p.a.
This would be manageable.
Clearly a struggle to survive after the Covid shock, but I am holding, my judgement is that this is a well managed company at it will survive, then in time, prosper.

[janekane] 22/2/2023 13:08

The market rarely get it wrong if my posts regarding debt are wrong then the share price must be wrong
Question is then “why is it falling like a stone in a beer vat “
One poster states the freehold values exceed £2 billion
no they are not these figures are based on a company doing very well and has assets. Free of debt the market are expecting downturn in revenue from the pub sector making all these speculation posts utter rubbish
Beware the debt argument here leaves a lot of people’s pocket book in the red

[careful] 22/2/2023 08:40

Charlie Munger, Warren Buffetts long time partner said last week the inflation was a headwind for equities.
He also said it was inevitable in a democracy, governments are forced to overspend to win elections.

It seems as though HMG are about to cave in to the nurses then the floodgates will open.