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Carlsberg Marston’s Brewing Company – an evolution explored.
By James Beeson19 January 2024.
https://www.thegrocer.co.uk/alcohol/carlsberg-marstons-brewing-company-an-evolution-explored/686984.article
Should hopefully underpin the #MARS update and start the real recovery
https://www.thespiritsbusiness.com/2024/01/uk-bar-sales-rose-5-6-in-december/
Hi all
If the asset estate is about £2bn and they have about 1460 pubs, then each pub is worth about £1.37m?
Is that the correct way of looking at it, on average?
Thanks
I have just read the good results from mab christmas trading statement,here in my world marstons have dropped down to 32 so with any potential good news next week we might get up to 36.
Https://www.marstonspubs.co.uk/pubs/finder/?promo=paw
Marstons pub finder
Where the name of the pub shows SV in a red circle in the top right hand corner , this indicates that they are valid there (think this means shareholder Value).
Book of vouchers arrived yesterday - personally I would prefer a dividend but useful none the less. Only difficulty how do you tell a manger pub from a franchised or tenanted one?
Delivery of the vouchers depends on which broker you are with.
With ii and Hargreaves you need to ask for them through their messaging system, and they will send them to you.
AJ Bell don't want to be involved so you need to ask Marstons themselves providing evidence of your holding.
Beware, that previously managed restaurants that they qualify for are quickly moving towards a franchise model and will no longer accept them.
500 shares are needed with a qualification of 30th of November
My Marston voucher book arrived in the post yesterday. 30% off food to 30 Nov.
Last year we had 12 discount vouchers to use between January and November. 30% off food only.
I have not had a notification about any this year but do expect to get them.
You need to hold 500 shares.
Anyone know if Marston's still offer a discount card for share holders? If so how many shares need to be held to qualify for the discount? Thanks in advance 😁
Whitbread update tomorrow should give an indication of the sector -which I understand is doing very well now post pandemic. Let's be honest it is great to get back into a nice warm pub afterall. The Carlsberg Marstons partnership have renewed the partnership with Liverpool FC I see too. Also no pubs have been sold recently at less that book value and all were sold at a profit-for the last account- why would they as the market comes back. Would be interested in figures for Christmas and the new year now as they were talking about increased orders before. Referral was made to re-valuations of their propertied in the new year -post pandemic and so this will help fixed asset values further I am sure. Also looks like they could be supplying Red Oak soon too, as well as Stonegate. Still lots of growth to come here and even though I am doing very well here I have no intention to sell any of my shares.
Cash in the bank is always good news
This might the reason for the breakout of yesterday:
https://www.morningadvertiser.co.uk/Article/2024/01/09/Red-Oak-Taverns-acquires-four-pubs-from-Marston-s-Jan-2024
Not huge in the grand scheme of things considering Marston's scale but it demonstrates two things:
- Marston's can sell some of its pubs (although no price provided).
- Lenders are willing to support pub companies (the buyer had a large chunk of debt, yet its creditors agreed to lend it even more money for the purchases from Marston's).
Determined by the higher SP level and the higher volume than the last few days.
I had honestly not expected it so early in the year. I’m intrigued.
(I’ll respond to Fairdealer in detail later.)
But in the longer term, someone buying at the current price rather than at 27p would hopefully seem insignificant to them - when back to £1 +
I did
Marston's
Wright suggests brewer and pub brand Marston’s is undervalued, highlighting that its debt levels have fallen after selling property assets and 60% of its brewery business to Carlsberg.
“The valuation it achieved on the disposal means that the remaining 40% of the brewery business that the company still own is valued at around £250m today,” he says.“
That compares to a market capitalisation for Marston’s of less than £200m. It is not inconceivable that somebody will buy that remaining stake from Marston’s in the future.”
Wright highlights that Marston’s has close to £1.8 billion of freehold property with just £1.2 billion of debt against it.
“The entire pub estate should also be able to generate operating profits of more than £170m in the near future,” he says.
“It is obvious that the shares are currently massively mispriced.”
Good quality food at very reasonable prices,in good locations and beer gardens with great ambience will see the company take advantage of competitors failure.
Sales increasing,so no aversion to alcohol from anybody by the looks of it. I like the modern format of this companies estate.It bodes well for the future,especially the beer gardens.Totally undervalued on every metric. This could easily 3 bag and still be cheap.Interest rates coming down will help investors to see the complete undervaluation on offer.
Shaperite
I totally agree with your summary, FD's view on the accounts and their quirks has been consistent & correct over the years I've been on this BB.
My gut when they were at 30p & below that they were trading like option money was not wrong either, every dog has its day, but some on this board don't seem to appreciate the headwinds facing MARS currently.
Not the least of which is an apparent aversion to alcohol intake by the younger generation, something I never expected to see in my lifetime but by the number of pubs closing in some parts of the UK this seems to be hurting.
As the contributor who began this discusion, I f ind Fairdealer20s annalysis overly compelling, a group like Marsdens should have more liquid assets than they have, the board were caught with their trousers down with regards to the Brains estate and in a declining market with increased prices will they be caught again with the rise of 10% in the minimum wage and all the subsequent add-ons. For the sceptics out there I AM AN INVESTOR not A SHORTER !!!!
The NAV is a combination of declared values. Property values are reviewed annually on a 1/3 of the estate on a rolling basis. Many of the fixtures/fittings/machinery is valued at cost with a determined annual write-down. Intangibles are included as an asset ( £32.9m).This is very questionable as it includes Goodwill which is not a number easily valued ( it could be worth nothing , it depends much on what the market considers a true value. Liabilities are well documented and cannot be disputed.
Total Liabilties at yr end amounted to £1814.3m.
Total assets £2454m.
My word "opaque" seems to have been interpreted as " misreported".....Wrong. To further qualify my " opaque" statement, the accounts disclose an Impairment in respect of leases of £4.9m. The Brains estate is 100% Leased. It is therefore reasonable to conclude some of this Impairment relates to Brains, even though not split out, hence "opaque" .
Comment regarding the rationale put out by RF in respect of the PLatinum offer, should be considered alongside events taking place at the time. RF was negotiating the deal with Brains. John Rhys ( Brain's CEO) was under significant pressure from Banks to reduce debt, consequently a deal was hastily arranged. Meanwhile the PLatinum offers were kept in the background. The Platinum offer was reasonable and in the opinion of some here could have been improved. That offer now seems to have been far better than anything likely to materialise now. It should be noted both Ralph Findlay and John Rhys resigned their roles shortly after the agreement with Brains completed.
Within 12months, Brains placed it's Freeholds for sale.
Now examine the prediction of a 70p T/O. A predator will want around a 20% profit on INvestment.
To achieve 70p an asset-stripper will need funds around £2454m ( £1815 to clear debts and £443m to compensate SH's)
Capital Markets currently offer 6+% . It's a no Brainer, a predator can achieve a fair return just leaving money on deposit and no uncertainty with the value of an asset where values are questioned. A predator may be interested given the uncertainties, if value is closer to 40+p.
The External Auditors report requires scrutiny.
They comment on several areas " the valuation of Freehold Land and properties has a high degree of estimation uncertainty"
Fairdealer - the calculation of the NAV takes all mortgages, charges and other agreements into account under standard reporting rules. So the Carlsberg "shackles" are taken into account in the NAV.
Likewise, you appear to claim that the Welsh estate has been misreported. What evidence do you have of that?
"You have commented on the declined offer made by Platinum in 2021. That offer was 107p at the 3 rd time and not put to SH's until completely declined by Ralph Findlay."
- It was turned down because it was deemed not to value the company adequately (as stated officially). Yet Platinum still made that offer in the first place, after placing two earlier (lower) offers, so they too clearly agreed that the business was at least worth that in spite of the above-mentioned "shackles".
The market not being confident about the company at present is an indicator of sentiment, it is not hard evidence of the company's health and NAV.
And this is where a takeover would be highly interesting for the company's new owners: if a consortium of parties that together don't need to borrow a substantial amount of money to pay off a large chunk of Marston's debt gets the business, then by indeed making that payment (or part-payment) of the debt, they would then enormously boost its profitability, especially in a period of high interest rates. As interest rates are getting increasingly likely to come down (albeit slowly probably) this year, it makes sense to buy the company sooner rather than later (so long as no money needs to be borrowed for that purchase of course).