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Fairdealer.
Some valid points. Some of your points do need answers. One way to find out would be to email RF and ask for direct answers.
Shall I take the lead?
Call me a pessimist, I prefer realist. I do not agree with expectations voiced, for the following.
There will be a stampede once pubs etc open up. Let's assume it will be May, the sector have lost 2 of the most valuable income periods with Christmas/New Year and Easter. This leaves the hoped for lucrative summer which given good weather could be a bonanza, don't forget some huge sporting events, Olympics, Euro Cup etc etc. Some of these events, Olympics are likely to be stay at home for most and will aid off-sales but not Pub sales. Looking at the accounting year, ends 30 September, a hell of a lot of lost income has got to made in 5 months. There won't be any profit for the current year.
Looking at the role of the CEO, the clear intention to not engage with Platinum by the hasty completion of the arrangement with Brains demonstrates a closed mind. Remembering Platinum were not enamered by the Brain's event, they had until the end of February to make a final offer...we will never know how much more would have been on the table above 105p.
It is symptomatic of the mind-set, that whilst negotiations were taking place with Brains in early December, 2 offers were put forward by Platinum which PI's were not informed until end January. Now ( today) we are told about an Analsyts presentation today focused on the future with the Welsh estate., and shareholders are still waiting the Management Agreement promised on the Brain's Completion day ( 5th February).
Shareholders are in the dark on the substance of this agreement.
The original understanding stated there are 156 pubs in the Brains estate which Marstons would manage.
The Presentation to Analysts states 107 pubs plus 30 below par where a peppercorn rent will be due for 18 months.
Rent on the Brain Estate is due in Advance.
Where are the missing 19 pubs?
Are Marston's enhancing the 30 below par pubs in return for Nil rent?
The problem, as I see it, until the Management Agreement is published, what exactly is Marstons letting it self in for? The plain fact is Ordinary Shareholders do not know.
It may seem pessimistic, but questions need answers, any LTH should be concerned at the disdainful way in which information is obscure or being witheld.
AIMO
DYOR
I agree with Trent on this, I think some here are taking an overly pessimistic view; it's highly likely waivers will be signed and Mars has more than enough liquidity to see them through until reopening anyway. Furlough scheme also allows for a financially flexible reopening at a perfect time (June-Sep) when consumer spending will surely be at an all time high (indeed, the young will be spending like millionaires, combined with all the staycationing).
In terms of analytics, the SP is showing positive signs that is gradually re-rating back to pre-covid levels.
Still holding here with a target of 1.30-1.50 medium term.
Good morning London 69.
Yes, Indeed. I get your point on waiting to see what transpires sp wise on it's own merit. I rather think that you perhaps look at things a little more clinically than I do with this one. I'll be joining you in raising a glass of two when the pubs open and we are proved to be right.
Have a good day mate.
Good morning Trent,
I agree it's more than probable that we will get to 105p and only at that point will I say well done to RF for making the right call for shareholders.
Thanks
@London69.
Looking at current sp, I would say that expecting to see £1.05 on the open market in the short to med term is a reasonable assumption to make. The probability of reaching beyond that med to long term as lockdown restrictions ease and pubs re-open is also a reasonable assumption to make.
Based on that logic I believe it to be a fair assessment of why I'd said that RF was correct in rejecting. Platinum's approach.
Hi Fairdealer,
We seem to be getting a little bit ahead of ourselves with some suggesting RF rejecting an offer of 105p was the right decision, however its too early to say that and tell me that when the share price increases above that level.
I do think the waivers are somewhat of a formality and given that they are big banks, I expect then to sign, however there maybe an increase in the interest rate.
I would expect secondary secured lenders to get anywhere around 8%.
Good evening all.
barchid, I totally agree. You only need to read the text of the last waiver and it seemed to me they (BNP) are a much tougher bunch of Bankers. Hope RF is not relying on the Covid sympathy card!!
Fairdealer & YoYoMa
I have to say I am a little nervous re BNP in the background, these waivers seem to be taken ASAP, perhaps rightly, but time alone will tell if they have driven more resonable lenders into the arms of BNP.
YoYoMa, will not repeat my views on the Brain's venture. It should be a concern when the initial understanding was agreed on 23rd December, we were informed Full details of the Management Agreement would be issued at the same time the Agreement was Completed. As most may remember Completion was hastily done on 5th February. the RNS was released after close of markets on a Friday. We are still waiting for details of the Brain's Management Agreement.
This is poor form to say the least.
RBG did very well and the RNS was what we needed to give us a boost and lift moral. They have done well to last and at one point did think they'd implode but they managed to stay afloat.
The locations of the prems will no doubt be filled with the youth spending like millionaires weekend.
Some good and very practical points, but also read RBG's RNS today and if they're feeling positive about the future then I'm pretty sure Mars can too!
Good point FD, the waivers are being used too often and I sense with the restructuring in a lot fin companies there may be more resistance this time round. The SP is looking good and may take a slight knock once the outcome is known but we're in a much better potions than most. I am very keen to see the overall plans for the SA Brains deal, my local MARS has had some good work on it over the past few months so they're spending on some pubs, not sure to what extent.
Hope all is well with here and your all in good shape.
Joe suggest you read the previous waiver applications, this is the 3rd in 12 months. On the last occasion HSBC agreed a waiver on the basis loan payments were reveiwed in April 2021 when business activity may have returned to some form of normality. The conditions of that waiver includes the transfer of the Bonds to BNP Parabas when interest rates will be amended on agreement at the end of this year. If agreement on rates are not agreed there is a formal mechanism to remedy any impasse that may exist. The agreement with BNP Parabas will not allow further waivers. Not at this point but after transfer to BNP which is later this year.
Would've gone above that this morning if it wasn't for the RNS I reckon.
(albeit still a positive RNS, agree that MARS will emerge very strongly, expecting a rise anywhere between 1.30-1.50 come summer)
It looks to me that RF was right to bin off their approach. £1.05 (and beyond) is easily achievable in the short to medium term now with possible easing of lockdown and I understand that beer & fag duty not being increased.
Just want to add here that 'staycationing' is going to have an absolute bumper year, and thanks to rishi's plan, pubs will really reap the rewards come June- Sep.
Reckon this will be nicely reflected in the SP soon enough.
Well if Rishi extends the furlough until September then combined with June openings- in which time consumer spending will be at an all time high- it will give businesses in the hospitality sector enormous financial flexibility.
I see a 6% rise say happening tomorrow. Can it break the previous two highs?
I agree, but I think I'm going to remain optimistic here and say that sunak will announce positive measures. And whilst it's all well and good to look at fundamentals, this pandemic has proved to me more than ever is that share prices (particularly in this sector) are being evermore driven by investor sentiment. I think you'll be surprised this year by how much these losses could nevertheless be made up, I'm certainly not underestimating the massive pent up consumer demand for spending/drinks out.
So predictable today, lots fooled by a small retrace, only to wish they hadn’t when Mars jumps 6% on the open. Tomorrow can only be good news for this industry. There will be no news that could be bad let’s face it. Sunak will sort it I’m sure. Imo
As seen the SP is not breaking through 105p, we may be surprised, as will the market, by the details Sunak announces tomorrow. The leaking of Budget specifics, is highly unusual and could be a smoke screen. No doubt Sunak will have some surprises. Other hospitality chains have good NAV, even MAB. Compare MARS and it does not give the comfort found with those in the Peer grp.
Investments in this market is risky, those making money are basically Day-traders. Patience and nerve is required for longer term benefits.
I take it you think a somewhat ceiling has been reached here then?
Putting all your eggs in one basket is never a good policy. Fullers, Shepherd and Neame are up, MAB are down but that is as much to do with intergration of the RI. Any Alcohol Duty reduction is extremely doubtful. The £5B pot expected appears to be going towards creating "Community Pubs" which may help MARS with some disposals, although not sure RF wants the Estate to reduce further against the back ground of the Welsh Mission. There may be some short-term spikes which will enable those who have some exposure, to get out with profit.
Longer term, much depends on the re-opening and how debt is going to be managed. Like other Pub/Hospitality chains we have enjoyed a VAT holiday, MAB have got to find £30m, we have no information what the liabilty is here. There will be No profit for the current year and looking further ahead Bond-holder caviats will not allow dividends for at least 2 years even if profits allow.. It will be good but surprising if we see the SP approaching 130p anytime soon, it is more of a mirage as things stand. Let's hope RF does not rue the day he refused to engage with Platinum.
All pub stocks seem to be slumping today; not sure if that's due to the mixed news reviews over the budget. Nevertheless, think tomorrow will be boost we need to surpass the £1 level and prove the CEO right- that this share is indeed worth far more than 1.05..
More invested here than ever at the moment, so hoping tomorrow will finally give publicans the clarity and support they need. Looking forward to the future with everything reopening, think this is a great buy, particularly for the medium term.