Marston's Share Discussion Threads

[knowing] 01/6/2018 11:01

Happy to sit tight and accumulate these and DC. for dividend and growth. Not the most exciting but the returns should be good.

[mr_spock] 01/6/2018 10:38

Posted my reasons (see below) for buying in on the other thread a couple of weeks ago (why do we have two threads?!). Looks to my (inexperienced) eye that there's more upside potential than downside, even if the growth is pedestrian.

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New to this sector, but think there are more positives here than negatives so I'm in.

Positives:
1) High yield
2) Diversified - brewing, pubs, accommodation, distribution
3) Market share is increasing
4) NTAV of 142p per share. 95% of properties are freehold, which is more expensive to begin with but should pay off in the future.
5) New distribution deals will open up 1600+ new distribution points for MARS beers
6) Acquisition of Charles Wells brands will help MARS to penetrate new markets/geographies (Youngs, etc gives access to the South and south east, and McEwans to Scotland)

Negatives:
1) Large debt (normal for this sector)
2) Maybe more pain to come in food with current high level of discounting, but the troubles of RTN, Byron, etc don't appear to have troubled MARS too much (so far anyway).
3) Could we see any further downwards re-evaluation of the property assets? Seems unlikely and next evaluation is not due for three years.

[gerdmuller] 01/6/2018 10:32

I also think that the high street retail space has not been hit so much by the pressure on disposable income, but more by firms like Amazon coming in with extremely low cost bases. Bought a few of these around 104p a few months ago. As long as they can keep a high yield they seem worth holding.

[jeffian] 01/6/2018 10:24

"Consumers are being hit because their pay is not keeping up with inflation."

Quite the reverse. After years of that being so, full employment has now started to push wages up.



I think that MARS problems stem from it being low-growth, pedestrian and set in its ways. It plods along just doing what it's always done - building more pubs, buying more breweries and producing very low rates of growth in profits and dividends. No growth = low rating which is why it trades on such a low PER. The answer is in the title of this thread.

[knowing] 01/6/2018 10:11

Well I have taken a few more on this dip. It's not a Mars (bar) we are buying

[spacecake] 31/5/2018 23:08

I suspect mars is getting sucked into the distressed retailers club. If the consumer is struggling and there's evidence for that looking at how many retailers have gone under or are contracting then how long before it impacts bars ?

Consumers are being hit because their pay is not keeping up with inflation.

[cc2014] 31/5/2018 13:14

Our challenge careful is holding on to our shares until it hits £3 and not selling out at £1.50.

I agree with you. I'm holding loads of stocks like MARS where the debt is perceived as bad rather than good.

I think 3 years down the line we will all be asking why we didn't buy more at these prices.

[careful] 31/5/2018 12:44

a pe of 7 and a yield of 7.5%, covered at that.
If they can keep that up for 10 years even without growth, who cares about the share price.

The rule books are all being torn up.
Debt here is OK.
A risk free 10 year gilt offers 1.24% today.

We used to reckon that the yields on HMG debt should be higher than that of share dividends.
This is because of the possibility of earnings and dividend growth caused by the wise use of retained earnings.

The crash of 1987 was said to be caused by too large a gap, the 'reverse yield gap.'
10 year gilts were at 9%, share dividends averaged just under 3%..crash.

What strange times we live in.
Mars would be north of £3 applying the old rules.

[knowing] 31/5/2018 12:14

Could see a nice run higher

[cc2014] 31/5/2018 10:54

Looks to me like the bots are currently running to "buy everything you can up to 100p" but try not to disturb the price.

How long they will keep going like that is hard to say as they aren't getting much volume.

If they want volume they are going to have to push the price over a quid

[knowing] 31/5/2018 09:58

Short stops probably sitting just over a quid.

[cc2014] 31/5/2018 09:44

Trying for a quid now. L2 and trade flow suggests not many sellers out there as price is rising.

[knowing] 31/5/2018 08:58

I'll drink to that. £1 is key. Still say back to 1.40-1.60 trading range especially with summer and World Cup approaching

[chinese investor] 31/5/2018 08:41

It'll be good to see a pound again.
Great dividend well covered.

Great income stock !

[exel] 30/5/2018 22:54

just looking at a challenger pub stock CPC (figs stated first below) v MARS (with all figs per ADVFN and/or latest reports*)

t/o 37.4m v 992.2m
profit -0.7m v 84.7m
eps -2.45p v 14.2p
PE ratio n/a v 6.944 times
market capn 120m v 625m
pubs* 44 v 1,564
div n/a v 7.5p per share

holding MARS right now, but with great respect to CPC, who have some fab locations, as do GNK.

[knowing] 30/5/2018 13:41

Chart looks interesting. Currently oversold and rising. Should be in the 140-160 range

[knowing] 30/5/2018 13:35

Heavy drinkers all over the UK

[careful] 30/5/2018 12:54

the old QE bazooka will be back in action.
central bankers know how to use this tool now.
There will be no banking crisis this time.

[jeffian] 30/5/2018 11:32

I don't need to look at the chart, I was there! It was hammered because they seriously upset the City by surprising them with a (very) deep discounted Rights issue and a dividend cut which, arguably, were never needed.

[blobby] 30/5/2018 11:21

If you look at a chart you can see how Marston's was hammered from over 400p to less than 100p in the last banking crisis.

However...

a) We don't have a banking crisis yet, and if we do it might not be an issue for Marston's banks.

b) Marston's share price at less than 100p seems to be already discounting a crisis.

In terms of types of debt, it may not matter as the important thing is how long term they are. If the debts are due (or can under certain circumstances be called in) in the short term then that is the problem.

[hvs] 30/5/2018 10:51

net debt is 4.8x ebitda.

just read an assessment of VOD.
Very upbeat, but the comment that VOD debt of 2.1x ebitda. was too high

VOD has minimal fixed assets and is operating in a very very low margin business.Its Indian buy is a mess.

With Marstons there is no problem.

Lets all have drink to that.

[jeffian] 30/5/2018 10:51

Re bank debt, do remember that 'only' £320m out of total debt of £1.4bn is actually bank debt. The majority is fixed-term securitised bonds or 'lease debt' (sale and leaseback of pubs). When Enterprise Inns - which has considerably greater debt/EBITDA ratio - got caned and the banks started getting uppity, they simply transferred all efforts to paying off the bank debt even though the interest rates were considerably cheaper than the bonds, and ended up paying it all off just to avoid the onerous conditions the banks had applied.
Most of the pubco's have long-term fixed interest debt so short-term fluctuations are not an issue for them.

[libertine] 30/5/2018 10:42

CC2014

Sounds great in your world.

Italian voters - sense will prevail.
EU Build bridges - UK to stay.

Both in the same sentences!

[cc2014] 30/5/2018 10:29

I guess I'm an optimist.

I think the Italian situation will come over the next few months to pass with no harm. My rationale for this is that the Italian voters can already see the impact on the cost of government borrowing and that sense will prevail in the minds of the electorate.

Further, I think "the EU" will now have to recognise that if they want the EU to be successful they have to start delivering more of what the electorate wants rather than what the EU heavy hitters determine they want.

Maybe at the same time they could build a bridge to try and keep the UK to stay as well. It's not possible with the current EU leadership. But that's the problem. For us and Italy and some of the other smaller nations who are muttering about whether the benefits of membership are actually worthwhile.

Sorry, a bit off topic, but I've got it off my chest.

[blobby] 30/5/2018 09:31

I think the Italian worries are about a new banking crisis. Should this happen then banks are usually very mean to companies who have loaned a lot of money as they start demanding it back to cover their dwindling cash supplies.

Should Marston's have borrowed a lot of money from the banks and the banks are in a position to ask for it back in the near future, then the Italian crisis increases investment risk in Marston's. (I'm hoping this is not a big problem however)