Punch Taverns Share Discussion Threads

[jeffian] 22/12/2009 17:47

lagosboy,

There's several points there I can't agree with. "Punch is haemoraging cash every month...". Errrr, no it's not; whatever else they are, pubco's are hugely cash-generative as a glimpse at the accounts will show. If you're talking about the rent-relief and beer discounts of £2m/month they give to struggling tenants "...trying to keep pubs a float"), that £24m is hardly material in the context of £1.4bn annual revenue and £0.5bn EBITDA!

"What that value is, I have no idea, but it must be south of the current share price." Why? One can understand why the share price stands at a discount to NAV for the reasons given in my earler post, but why the value (NAV currently 260p/share) "must" be less than 67p is not clear.

[lagosboy] 22/12/2009 17:24

Punch is haemoraging cash every month trying to keep pubs a float.

Some of you need to look at the accounts more closely, it is being choked by debt, which incidentally was all downgarded by Fitch recently. Banking convenants will become an issue.

It will almost certainly need a nother rights issue next year or some other form of fund raising, whatever route is taken that will be highly dilutive.

Just as this was once a 'go go' sector, now nobody will go near it. 5 pubs a week close in the UK.

Soon, as Jeffian says, I agree its only intrinsic value will be as a pure property play.

What that value is, I have no idea, but it must be south of the current share price.

[jeffian] 22/12/2009 11:49

PUB and ETI are in the same boat. They may have convinced the market they are not going to go bust and be 'cheap' in relation to their underlying assets, but here's some reasons why people may not be buying them at the moment in preference to other companies -
1) Both have seen profits falling, are predicting further falls and offer no clear vision of how they will return to growth
2) Neither pay a dividend. In PUB's case, covenants in their securitised bonds may 'trap' cash and prevent it being passed back to the parent for distribution in the future.
3) The banking crisis is forcing a policy of asset sales which creates a vicious cycle of earnings erosion (the assets being sold to repay debt lose them a higher return than the cost of interest)
4) There is still the threat of regulatory intervention in respect of the 'tie' (both companies make considerable wholesale profit from their tenants being forced ('tied') to buy drinks from them)
5) However cheap they get, their size and market share probably precludes any offer by competitors and any private equity bid is likely to be as a property company (i.e. discounting the wholesale drinks side) and, therefore, cheap.

I'm not saying they can't or won't recover, but I am saying it will take some time and in the short term it is difficult to see why investors would buy into them, in the light of 1-5 above, when there are recovering companies producing profits and paying dividends.

I hold both btw! 8-(

[jas_ron] 22/12/2009 08:53

too cheap, debt being reduced - shares at these level 65p have huge recovery prospects - multi- bagger in next couple of years. people still drinking in pubs!

[aspers] 22/12/2009 07:59

fjgusto.....with on that, will see this climb back above 80p soon..... agreat buying opportunity :-)

[volsung] 21/12/2009 17:39

Kicking myself as I closed my short in the mid 70s :(

[5jacko] 21/12/2009 17:35

how does anyone see this going- its pising me off- as i am sure it is with anyone who isnt short here GLA

[hamsterape] 21/12/2009 14:18

The shorts have got hold of this and won't let go until it is dead.

Because the share price couldn't possibly be going down due to
longs closing out their positions on what they now consider to be a dud
investment. Oh no, the shares must really be worth loads more but
the nasty shorts are "manipulating" the price down. Yes, that must be it.

[lagosboy] 18/12/2009 09:08

Who is Ho Ho Hoing now.

As I said, next stop 50 pence.

The shorts have got hold of this and won't let go until it is dead.

[lagosboy] 16/12/2009 17:02

Lovely day, as I said next stop 50 pence.

[lagosboy] 16/12/2009 08:42

RNS,all very disappointing.

[aspers] 15/12/2009 21:17

Lagosboy......You may stay at home and drink as you have no mates....the last few times I was in a PUB pub they were pretty busy....we have to go somewhere to drown our sorrow's :-)

[lagosboy] 15/12/2009 17:21

I am not so sure that news will be very good tomorrow.

Fitch Ratings agency downgraded the debt today and outlook for EBITDA was not great.

All the same problems remain, economic outlook horrble for next year and the supermarkets making a killing.

People don't go down the pub any more they pick the booze and food from bloody Tesco's.

Company still has huge debt and structural problems to resolve. I see a bottom around 50 pence if this is all true and hopefully a takeout, not of the culinary type at the £1.20 level next year.

ETI was horrible....oh well.

[aspers] 15/12/2009 09:27

Should get some decent buys before tomorrows RNS....I just bought £6K and they show as a sell!!

[jeffian] 11/12/2009 13:36

I don't disagree, Sardine, but timing is the issue. In the longer term, there may be value to be unlocked but in the short term they face multiple uncertainties including refinancing, maintaining profits never mind returning to growth, lack of divi and the ongoing Parliamentary enquiry into the 'tied' business model. I think you'll have the opportunity to buy at these levels - or less - for a while yet.

[sardine2] 11/12/2009 12:32

=jeffian,

Hardley a compelling case for investment. Methinks that you need to think more long term. in the short term you might be better off investing in a more stable stock. However, in the longer term there is some serious money to be made........

[jeffian] 10/12/2009 23:28

I shouldn't count on it. Subject to the banks not doing something really stupid, I think we have got beyond the point of the likes of PUB and ETI going bust, but even if trade and property values have stabilised, there is still another year of reduced profits and neither company pays a dividend - hardly a compelling case for investment!

[santa 2000] 08/12/2009 19:57

Fill your boots chaps, this is the bottom