Whitbread Share Discussion Threads

[miti 1000] 22/5/2020 14:25

Added more today....naturally !

[porsche1945] 22/5/2020 14:17

Cant really see the point in owning this, an empty hotel chain, in a pandemic, in the worst hit country in Europe, no dividend, highly dilutive rights issue (possible second wave will see these at a tenner) all downside risk and little upside. They need to stop building hotels anyway, anywhere, they couldn’t fill what they had even before covid. Poor management. I wonder in fact if this is yet another ftse 350 shorters wet dream.

[philanderer] 22/5/2020 13:50

Comment: Whitbread's medicine tastes foul but will make Premier Inn stronger in the long run

[philanderer] 22/5/2020 13:47

I guess they would have sounded out their institutional holders about their willingness to take up their rights at 1500p before yesterday's RNS .

[hodhasharon] 22/5/2020 07:26

First Target: 1771p

[buywell3] 22/5/2020 03:53

Some succinct comments made

buywell hates buybacks , when a company undertakes one it ceases to be of interest.

LLOY were buying back loads last year at 65p and over . These tend to only benefit a few at the time the buybacks take place.

Hotels,Pubs, restaurants and the like are all going to suffer badly whilst SARS-COV-2 is around .

Experts have predicted 18 months to 2 years.

Whilst hindsight is a great thing , 50% of the cash from the Costa sale ought to have been paid to shareholders

Perhaps a rule change or changes are needed along those lines

Shareholders can get shafted otherwise

IMO dyor

[rndm355] 22/5/2020 00:06

comments on WTB here:

[bountyhunter] 21/5/2020 19:34

This used to be a great investment, under the old CEO!

[hotchillideals] 21/5/2020 19:21

https://www.telegraph.co.uk/news/2020/05/21/pubs-restaurants-could-reopen-now-without-risking-public-health/?adobe_mc=TS%3D1590085213%7CMCMID%3D46044897269834351492417322240354033577%7CMCORGID%3D2C7336C753C676BA0A490D4B%2540AdobeOrgPubs and restaurants could reopen now without risking public health, says Oxford scientistProfessor Sunetra Gupta says coronavirus epidemic 'on way out' and urges rapid exit from UK lockdownPubs and restaurants could reopen tomorrow without posing the threat of a second wave of coronavirus, a leading Oxford scientist has suggested.Sunetra Gupta, a professor of Theoretical Epidemiology, said there was a "strong possibility" that the hospitality industry could get back to work without posing a danger to the public.In an interview, Prof Gupta called for a "rapid exit" from lockdown and said the coronavirus epidemic was already "on the way out". Much of the UK population may already have been exposed to the virus before the Government ordered people to stay at home, she added.In March, Prof Gupta and her team published a controversial study claiming coronavirus had been spreading for months, with up to half the UK population already exposed.However a separate analysis, produced by Professor Neil Ferguson at Imperial University, claimed the virus had not yet begun to spread and warned that 510,000 people could die if no action was taken. The Imperial study convinced ministers to introduce strict lockdown measures days later.Prof Gupta insisted during an interview with Unherd website that her original theory was correct and the UK had already developed a high level of "herd immunity" to coronavirus, adding that the fatality rate was likely to be in the region of only five people per 100,000 cases."The Government's defence is that this [the Imperial College model] was a plausible worst case scenario," she said. "I agree it was a plausible – or at least a possible – worst case scenario."The question is, should we act on a possible worst case scenario, given the costs of lockdown? It seems to me that, given that the costs of lockdown are mounting, that case is becoming more and more fragile. "I would say that it is more likely that the pathogen arrived earlier than we think it did, that it had already spread substantially through the population by the time lockdown was put in place. I think there's a chance we might have done better by doing nothing at all."Prof Gupta said it was likely that many people had already "fended off" coronavirus for genetic reasons or through natural immunity to other coronaviruses such as the common cold.She added there was now a "strong possibility" that pubs, nightclubs and festivals could reopen this week without risking public health."In almost every context we've seen the epidemic grow, turn around and die away, almost like clockwork," Prof Gupta said. "Different countries have had different lockdown policies, and yet what we've observed is almost a uniform pattern of behaviour. To me, that suggests that much of the driving force here was due to the build-up of immunity."Meanwhile, pubs have warned that the two-metre social distancing rule would make it "very difficult" for them to operate.The British Beer and Pub Association (BBPA) said that if the UK followed the World Health Organisation's advice of imposing a one-metre distance it would "enable many more pubs to viably reopen and serve their communities again".The Scientific Advisory Group for Emergencies (Sage), however, has advised ministers that the two-metre rule should stay.

[karadas09] 21/5/2020 19:06

Essentialinvestor, The crazy thing is that they did have something else to do with the cash. At the time of the buyback the strategic intention was to expand into Germany. Buying back shares at a premium and then relying on debt to expand the business was nonsense and clearly just a way of trying to increase the EPS number. I still think Premier Inn is a great business but the BOD are idiots imo. Sadly the same is true for a lot of UK businesses.

[ianood] 21/5/2020 19:00

Hate to say it but this BoD have exhibited far too much self interest and have behaved atrociously post the sale of Costa. The fat woman has already sang as far as I'm concerned and have exited the last of the holding 2 weeks ago. Biggest mistake was not selling the balance post the tender!

[philanderer] 21/5/2020 17:56

Dead money I'd have thought until the rights take up is known.

[porsche1945] 21/5/2020 17:01

2ygor. If you are a holder of this I would in fact be praying very hard that this does become “ takeover fodder “ as it’s the only way the price is likely to move meaningfully upwards.

[essentialinvestor] 21/5/2020 15:47

How much have the directors put in total, no firm details on that either.

Previously highlighted the consistent multiple director selling.

At least they got that timing right.

[essentialinvestor] 21/5/2020 15:45

The mistake was not selling Costa, it was buying back their stock at inflated prices.

I posted at the time it looked very unwise, that this should be conducted as a multi year buy back programme, if they could not find something else to do with their cash.

[ygor705] 21/5/2020 15:21

The great pity about all this is that Premier Inn and Hub are great budget hotel offerings. I fear that with management as poor as this lot Whitbread has become takeover fodder for one overseas group or another.

[montyhedge] 21/5/2020 14:07

Big mistake selling the family silver, Costa Coffee.

[typo56] 21/5/2020 13:56

More chance of sub £22 than over £25 next week IMO. Who knows, they might do both...or neither!

[miti 1000] 21/5/2020 13:00

Typo56,
More chance of rising back to 25 quid next week I'd have thought. I've been buying WTB all morning.

[porsche1945] 21/5/2020 12:47

Quoting Peel Hunt?? This will be the broker that had Aston Martin at 20 quid a share a year ago??!! (now about .40p) A debt ridden private equity dog obvious to all with a pulse. I was shorting them all the way from 18 quid. Just do the opposite of brokers suggestions and you will do just fine.

[typo56] 21/5/2020 12:34

Sadly lots of cash on the balance sheet isn't cool.

It attracts private equity bidders who will promptly walk off with the cash, load it up with debt and float it off again.

It also doesn't help some of the metrics investors push you to achieve.

Using cash for buybacks raises the EPS and yield (and/or allows you to reduce dividend costs), and it provides some support for the share price, all for very little effort on the part of management.

On another matter, the FTSE annual review is on 3rd June. I think FTSE will regard this as a highly dilutive rights issue and include the value of the nil paid rights. If they don't, and WTB fall below about £22 (which they could next week), they could be out of the FTSE 100.

[philanderer] 21/5/2020 12:32

Peel Hunt:

It doesn’t seem so long ago that Whitbread’s management team was being questioned about whether it should sell and lease back assets to release capital. Having ignored those suggestions, the group went into the Covid-19 situation with a suitably relaxed capital structure.

Whitbread, as the operator of all its sites, has been able to act decisively during the Covid-19 situation to control costs and capital spending across its network of hotels and to access available government employment cost support and financing. It has control of its whole value chain, in contrast to asset-lite hotel companies that, in some cases, have a more complex job of trying to help multiple hotel owners to optimise their positions.

Today’s raise means that Whitbread will be able to plan for the long term (ie, after Covid-19). As sites reopen it will be able to make operational decisions based on maximising market share (and the pain for competitors). In terms of expansion it will be able to acquire freehold sites (perhaps newly shaken loose) and it will be one of the few quality credits around to lease sites into which to expand. Given the shift in the real estate market it will also be well placed to negotiate lease costs down on renewal.

Whitbread (founded 1742) has credible plans to expand to 110k rooms in the UK (from 79k) and a plausible (but largely unproven) plan to expand to 60k rooms in Germany (from 3k). The scale of this growth opportunity is key to understanding the options unlocked by the rights issue. It is not about plugging a balance sheet hole and surviving, it is about enabling a leap ahead along a strategic road already mapped out by management.

Whitbread is tapping the market for equity capital in a way its smaller, fragmented and sometimes overleveraged competitors can only dream of. It is already the leading hotel company in the UK and we expect today’s raise to help it consolidate that position and to accelerate growth in Germany. We would take up rights.

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Barclays View:

We believe there was already some expectation in the market of an issue and the reasons provided make sense, albeit the size is larger than we might have thought. At first glance, the guided cost and cash burn indications appear consistent with our prior expectations. We remain cautious on the hotel recovery in the near term but in the long-run we believe Whitbread should indeed be able to capitalise on the opportunities to take share from competitors.

[retsius] 21/5/2020 12:05

Porsche1945

Could not agree with you more, biting incisive comments which unfortunately expose poor, no ,dire management decisions.

They got an exceptional price for Costa but then with a rush of blood to the head , squandered it in ludicrous buy-backs at an artificially high price.

Maybe a special divvy, but unless you have shares in an ISA,they have huge tax implications. They save paying out on future dividends,( what dividends?) but never work and is just to show management is ‘doing something constructive.’

You would think their brokers would have given them sound financial advice, alas no, blinded by the success of the sale just agree to everything suggested.

Lord Weinstock used to be derided for a huge balance of cash with his company GEC. On retirement clowns came in, renamed , Marconi and was bust in three years. One executive was named Dr Death for his disastrous business dealings.
Imagine if they had the cash on the balance sheet now.
You couldn’t make it up!