|Still here and still happy holding. I had made up my mind to add a few more on the next dipette to 132 - cue a rise to 140. I'm actually now in profit on these for the first time since I bought back.|
|Not sure which bit to learn from; the fact that they're always full or the fact that you've given up going!
|We have given up going to our local Marstons new build pub. It's always full with a 40 minute wait for tables. So on that anecdotal basis I'm happy to carry on holding.|
|Anyone out there, if so,why the rise,any ideas.|
|Had to take some more today in 131's. Tucked away for the LT portfolio|
|Lord Gnome - it hardly sets your pulse racing, but I'm happy to carry on holding.
Bought at 93p sold some at 164p.|
|Time to buy? my advice would be to wait for the half year results first.
Remember last years normal eps of 12.7p does not include the £40m cash flow hedge loss, so real eps were around 6p last year.
If half year cash flow hedge loss is ~£20m they are on target for real eps of 6p this year therefore sell.
If half year cash flow hedge loss is near zero they are on target for real eps 13p then buy.|
|Two votes of support then, Skinny. Hopefully someone will take notice and give the share price a lift.|
|Berenberg Buy 134.05 - 170.00 Initiates/Starts|
|Peel Hunt Buy 135.20 - 150.00 Initiates/Starts|
|Kind words, but what do I know? If I'd been that prescient, I'd have unloaded all my ETI at £8 and been writing this from my yacht in the Bahamas!|
|Thank you, jeffian, for your very good points on gearing, and our long-running MARS - GNK comparison. Also, coming from yourself, an acknowledgement of my earlier posts on MARS means a lot. Thank you! ex|
|Signs of life for MARS and GNK today!!|
|Yes, but has "any company" the same asset base against which the debt is secured? All the pubco's are geared up to the eyeballs because they're sitting on enormous - mainly freehold - property estates and compared to, say, residential mortgages, their gearing looks positively modest! MARS and GNK have been around for literally centuries and I'm sure they'll continue for many more years. They've just been through some of the toughest trading years and, whilst they have been wounded in both profit and balance sheet terms (MARS more than GNK), there has never been any point at which anyone thought that their assets did not cover their debts by an easy margin.
I thought exel (#1951 and 1955 above) had it pretty spot on.|
|rmillaree - I don't disagree with your logic. I just would like debt reduction to be a priority that is given a target. The one possible flaw in your thinking is that while it does generate higher returns to use debt funding it also increases the risk. Any company can (generally) get higher returns than the cost of debt. This doesn't mean they should gear up as much as they can as the risk of financial distress, in the event of a negative event, increases.|
The debt has gone up, but there is no doubting that the reason for the debt - specifically the new format expansion has been a very good use of the extra debt. It's a shame it looks like they are going nowhere (as it takes time for cash payback going down this route) but a replacement of lesser quality earning outlets and less desirable sellable estate with cash generating decent quality estate means they have made the correct recent choices IMHO. In summary why pay down debt at 4.5% when you can generate 10% ongoing returns albeit it takes some time for the cash to come pouring in. In the meantime there is also the divi as some cash recompense.|
|exel, JakNife - yes about estate transformation. But Marston's have been increasing debt in recent years due to their new build pub programme. They never talk about balance sheet ratios or reducing debt. I looked at their accounts before the financial crisis in about 2007 and the focus then was also on opening new pubs. Nothing wrong with that but I think they should also reduce debt.|
|interesting points, all 3 above, thanks - but its surely not just 'going for growth' - blindly - its 'going for estate transformation'. also (and I can't know this, but sense it) with any roll-out of say 15 to 25 new units per annum, they are bound to slow/speed/modify this development rate, in relation to performance of those units now opening or in year 1 or 2 etc - and in relation to new site availability that meets their investment criteria, and their geographic coverage. Finally, they have (a tad expensively, to be fair) secured long term borrowings/rates so may as well add the sorts of units (at the top) that they 'really want' in place, long term, while shedding a few (at the lower end) if/as appropriate (which I sense has largely been completed). In essence, theirs has been a migration & growth plan, not just growth, per se.|
|It's not exactly a growth stock. ROC is very low and ROE isn't exactly stunning. They're 6.5* levered and that's very high.
I'd say that the market is right!|
|Market is saying that Marston's should cut debt and reduce the expansion programme... management don't care and are going for growth....|
|Agreed. In good shape but out of favour. Yield offers support|
|This stock seems to be bouncing around, at its recent lows and resistance level of circ 132p., but (Punch apart) the sector is hardly 'flavour of the month' right now. I personally sense this gloom is a tad overdone, notably for MARS, but of course - who knows? especially with wider market uncertainties abounding! Wider recognition of the Interest Rate SWAPS cost/overhang here (as very well covered above - thanks all!) has probably proved a bit of a drag on the price and (arguably) still a bit of a problem going forward, but this will work through over time, and I do feel sure that the BoD will be working to manage/mitigate this risk/cost factor, and also to work gearing down, as with real interest rates, over time, as the pubs/lodges estate is gradually migrated to where we all want to be, from where it was circa 5 years back. Also, slackness of demand in hospitality generally (notably higher upwards in the food chain) has to be a restraining factor - with public appetite for discretionary spend a tad more restrained? given looming Brexit and rising Inflation etc. Still, I guess it'll be a slow grind?, but I finally met the 132.5p level today (actually better than that) and topped up again, materially. As pints are drunk, rooms are booked and meals are eaten, tonight & tomorrow, I'll lose little sleep tonight. Medium to longer term, the omens still look very good, and this Group will probably become a very serious target for a major player (like Heineken was for Punch) once it has done most of the heavy lifting to get to the estate platform & debt profile/cost to where we long term holders would all feel just that bit more comfortable. ex|
|I don't believe that rates rebasing is an issue , following comments made at the AGM.|
|Significant drag: inflation, living wage. Rates rebasing.|
|I hope so too. But If not, will add.|