Marston's Share Discussion Threads

[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

[careful] 12/4/2018 09:50

GNK on track to achieve £240m profit, well up on last year.
Only slightly effected by poor weather.

Let us hope this reads across to Mars.
If we could increase profit by just a little this year, then we should be off to the races.

[brwo349] 12/4/2018 09:14

GNK up 9.7% and MARS has hardly moved. MARS should be much higher on today's news from GNK

[redartbmud] 12/4/2018 09:05

The Deacon

Thanks for Gnk information.
Pub businesses remain under the hammer.

[the deacon] 12/4/2018 08:45

Here's Langton's take on it: (not too bad imv) Greene King has this morning updated on trading for the first 49wks of its current financial year being the period to the 8th April 2018 and our comments are set out below:• Headline numbers:• Greene King reports that it expects PBT in the year to end-April to be in the region of £240m to £245m. This is broadly in line with market estimates• Greene King reports managed sales in the 49wks to 8 April were down by 1.8% on the same period last year.• GNK says Pub Partners' net revenue for the first 48wks of the year was down 0.3% on last year• Brewing & Brands sales volumes were down by 0.7% (against an ale market thought to be down around 3.1%)• Managed pubs:• GNK says 'the weather over the last 12 weeks impacted trading, particularly in our destination food-led pubs, and on an underlying basis, excluding the impact of snow, LFL sales in the year-to-date were -1.2%.'• The 49wk period represents a slowdown on the 37wk period. Certainly 2018 does include the snow but it has Easter in it too, which was not the case for the first 49wks of 2017• As this is only a trading update, there is no comment on margins.• GNK says that food took the hit with 'both drink and accommodation LFL sales were ahead of last year.'• The company adds 'trading over Easter was strong with LFL sales up 2.8% against the Easter weekend last year, helped by strong sporting fixtures, especially football and boxing.'• GNK says that investment is paying off 'despite the continued challenging market backdrop.'• Momentum is clearly negative and, while 2018 numbers (though recently reduced) would appear to be in the bag, 2019 could be tough• GNK says 'we continue to reposition Pub Company to drive growth going forward; we will complete the exit from Fayre & Square by the financial year end; we opened nine new pubs over the year; and we invested core and brand conversion capex in 292 pubs.'• Other trading data:• GNK says 'after 48 weeks, LFL net profit in Pub Partners was -0.3% while own-brewed volumes in Brewing & Brands were -0.7%, ahead of the UK ale market at -3.1%.'• Both number represent a slowdown on week 37 data• GNK adds 'we remain on track to deliver targeted cost savings of £40-45m, we will have spent c. £160m in the full year in ensuring our estate remains well invested and our disposal proceeds are likely to be ahead of expectations at c. £120m following the sale of three high value leasehold pubs.'• Overall, Greene King reports it expects profit before tax and exceptionals to be 'in the range of £240-245m.'• GNK concludes 'with our high quality portfolio of pubs, excellent team, strong balance sheet and sustainable dividend, we remain well placed to withstand the external market challenges and deliver long-term value to our shareholders.'• Langton Comment: Greene King has reassured on 2018 but 2019 may be tough.• There are no comments today (and perhaps none were to be expected) on margins, debt or dividend.• We believe GNK will hold or perhaps marginally increase its dividend in order to maintain its sterling record in that regard. However, with profits down some 11%, there may be some concerns here going forward.• The weather has been unhelpful for 6mths or so.• But GNK has been able to confirm that the bottom has not fallen out of its world. This is reassuring to say the least.• Spirit was an ambitious acquisition. The group's shares have not performed well since the purchase. Certainly other pub companies have also experienced tough conditions and GNK is addressing its issues re Fayre and Square but the SPRT purchase may, with hindsight, not have been the best of ideas.• Uncertainty is unavoidable and this will extend to 2019 forecasts. These may be trimmed back.• GNK is prima facie cheap at these levels. It is one of the UK's better-positioned pub companies and, with its shares now trading at a single-digit multiple, this may be an attractive entry point.• However, the direction of travel is negative and the group has to execute on its strategy. There have been some signs of indigestion recently and cautionary comments may put off would-be buyers in the short term.