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I’ve invested in marstons today because I think that the share price decline was mainly to do with covid and the fact that the properties marstons own/rent devalued because everyone thought that hospitality was doomed etc …it’s all connected
Can’t wait to see their figures over the next 3/6 months plus properties will be valued more adding even more value!!
All in my opinion
Barchid, thank you. That is really interesting and puts a whole different perspective on their debt.
Lejjb
Firstly I agree with your comment re "SC...repeatedly shouted partial pictures" etc, a very accurate assessment, imho.
However, concerning the debt, I have an email conversation with Findlay, the previous CEO from 2016 which is still both relevant & disconcerting in 2023 and I quote ;
"of total debt of £1.273bln, £853mln is long term, (out to 2035) & secured on freehold properties. It is at a fixed rate of interest of approximately 6% (fixed at some time in the mid 2000's). To repay this debt would incur a very significant redemption penalty"... and then it goes on to discuss the other debt which is less inflexible.
I suggest that this is why the debt reduction programme is so modest relative to their current debt mountain.
I guess paying 6% today with base rate at 5.25% is respectable but it does not take very long to work out what paying 6% when base rates were at nothing to a jjam tart over such a period of time led to under investment & ultimately sellng off control of the real jewel, their brewery.
However as I also posted that with the SP down here in a 30p dustbin it is option money (& of course every dog has its day).
Thus I believe Mr Market is about right, yes they might get lucky & sell off a bunch of pubs or they will continue to wallow in the gravel & grit that they are currently in.
Personally I would much prefer to re read what Findlay wrote then, which is even more relevant today without control of the brewery & having gone through lockdowns, than "poundland puffs" every few days from the usual suspects.
FairDealer - SC has repeatedly shouted partial pictures of the company's business situation. He has not demonstrated any inside view - which would be illegal anyway.
The post from FINANCEmagic below does not actually provide any info on costs and other expenditures, expect the phrase "energy cost savings" but note that Marston's said it had its gas (or energy as a whole?) costs set to 2024 so it is likely less impact by the probably decrease of energy prices this quarter because its energy costs were (relatively) lower in the first place due to that prior arrangement.
What sticks out like a sore thumb, and which everybody vocally praising Marston's has carefully avoided mentioning, is the interest rate rises of the past 18-20 months. The pile of debts from Marston's was fine with low interest rates, but with the fast recent increases, that puts the business under extreme pressure.
Sure, some lender have set interest rates for several years ahead, but those loans are mostly staggered and regularly reevaluated.
Thus, there is no 100% clear information as to how close to the edge Marston's is (or not?) due to its debt pile, which probably explains why Marston's has been lingering near the bottom while other pub companies have risen well above in the meantime.
Experienced Investors need to know Net Profits. Sales can be bought through heavy discounts.
SC you appear to have an insiders view, what is the Net Profits?
(Sharecast News) - Pub chain Marston's reported a jump in sales on Wednesday as it hailed good levels of demand.
In an update for the 42 weeks to 22 July, the company said like-for-like sales rose 10.7% versus the same period a year earlier. Both drink sales and food sales have been strong, Marston's said, "demonstrating the steadfast trading resilience of our predominantly community pub estate".
In the 16 weeks to 22 July, meanwhile, LFL sales were up 10.9%, thanks to warmer weather in June. Marston's said the level of customer demand remains "good".
Chief executive Andrew Andrea said: "Marston's has delivered another strong trading performance"
Oddly enough I normally find Fairdealer posts well researched knowledge as opposed to out & out puffing like some others seem to specialise in.
I too would very much like to see how many pubs on the "for sale" list have actually been sold. It is totally disingenous to take one, rather questionable sale, to a buyer who wanted easier access, and is now considered to be a possible case of arson, to read across that all their properties are undervalued when those of us with memories remember well the fiasco of the aborted Pitcher & Piano sales, pre covid when property markets were buoyant !
As I posted earlier with the shares at 30p or under we are really looking at option money, but it is important that buyers realise options are more like a punt with a spread better or a trip to the bookies as opposed to conventional investment.
So long as buyers know what the risks are that is fine, but stocks like this are never a simple one way bet.
Clearly the lack of a bid from a VC specialist or a vulture fund leads me to believe that the assets may be worth less than they are shown in the accounts currently.
Its funny but every time Fairtrader comes on to pull the share down to buy at a cheaper price I buy some more!
You really need to do some research. I simply look at the official releases from our CEO who has said this :-
Marston’s pub estate is well-invested, and our geography and proposition lends itself to benefit from
underlying consumer trends. Whilst still early in the New Year, trading momentum continues to build,
and our primary focus remains to meet our strategic goals of achieving £1 billion sales and reducing
our debt to below £1 billion with all the subsequent benefits that both of those milestones will bring to
our shareholders.”
From 2020 Turnover (during Pandemic) has increased from GBP515.50m by 55% in fact to £799m this has now made them retain profit of £137M from a loss previous Sept 20 of Minus £390M so a turnaround of some £527m - can't wait to see this Septs annual figs!! DYOR
The points I identified have been ignored.
When were sales increased by 17%?
You seem to be confused with the inflationary increase in fresh food, which was more than 17% in the last accounting period. Sales are not achieved without costs, do you agree?
The situation at the Crooked House is now a crime scene and nothing to do with Marstons. It seem the New Owner already owned adjacent land. That needs to be considered when believing other Pubs have a similar value.
It would be interesting to know how many of the 60 pubs marketed by Christies have sold.
Sales have been up 10%, up 17% and up 10% when I last looked enhanced by the Sales are now at pre-pandemic levels. Errk what was the share price then? Looks like interest rates are peaking what with certain lenders now reducing mortgage rates which will in time ultimately reduce the cost of loans. So all good.
The other thing is on MSN news thee new owners of the Wonky pub ordered a digger a week before the fire and Marston had nothing to do with it, but it shows how much development potential (perhaps) some or their Estate still holds which is no bad thing. We have to also remember the Estate was de-valued during the Pandemic and as the pubs become profit making they will be worth more money whether to Marston or someone else. Time for me to buy some more soon!!
1Billion sales is not going to eliminate the Debt. You cannot forget the cost of sales.
Even though sales were up over 10% according to the last report, there was no mention of net profits, probably because food and raw materials had increased 17% during the accounting period under review. Marstons are not the only hospitality Co to have conveniently omitted input costs.
Whether the position was better or worse, pre-pandemic, what is the excuse to renege on Loan repayments?
A far safer bet no with Marston making overall profits reducing their debt, accelerating repayment of any loans by selling non core pubs. They did not give overall sales numbers but pre-pandemic they were £770 odd million, and their objective is to exceed overall debt with increased sales to exceed £1b.
To give them an advantage over competitors they also retain 40% of the Carlsberg Marston Brewing Company which is something their competitors do not have (including Wetherspoons). It would be good to see a dividend soon but we just need to be patient as the Company is moving in the right with an increasing accountant NPV currently valued at 97p approx. so there is less risk buying this share than before and during the Pandemic.
If Marstons need to dispose of pubs they should consult the Methodist Church which has no trouble selling off its estate.Often a Parish council is involved which tends to smooth things.
Looks even more dodgy now.
https://www.bbc.co.uk/news/uk-england-66442399
Family-owned Brains kept their best/sentimental pubs and were fortunate to find Marstons to take the rest of their very tired estate, there will only be two winners in the pub game, they will be local independent pubs that cater to the individual needs of the local community and The Spoons because of their excellent prices and range of products, I have no shares in The spoons, but you have to admire their VFM.
Are you having a laugh ? Bathams in the Black Country are familly owned and the Big Boys cant get a look in ? Having said that their beers are brilliant and their ambiance is what the market desires, but locally they set the standards !!!!
Family owned and could not compete with the big boys.
Are you lot serious ? Still over 1 billion in debt and charges and you think that it is acceptable in a n economy to have possibly 3 days of a working week where the product does reasonably well ( ie Friday , Saturday, Sunday ) and does shag all for the rest of the week ! Costs are still the same Monday , Tuesday, Wednesday, Thursday as regards staff, Electricity, Rates and scrapage ! You all think that because Marsdens was a FTSE 250 business, everything will be O.K., But my friends a portfolio of property does not give any succure in a declining Market, in fact it may even be a declinimg asset itself in a poor market ! I am not a deramper, I have Marsdens Shares as you know, but I am annoyed at the board who have used my investment in a totally irresponsible way.
I am from Cardiff, and the pubs are always packed on event days across the city, but on the whole the pubs 90% of the time are very quiet, I regularly use 3 pubs that Marstons got off Brains, and watching the business over the last 6 months in these three pubs influenced me to sell my Marstons shares, Brains Kept approx 20 of their best pubs and the rest went to Marstons, on what I have seen I think Brains have won in that deal, all three of these pubs that I frequent were thriving prior to covid, now they are dead unless there is an event on and maybe a little busy on Fri/Sat, to add to the problem they are all desperately in need of refurbishment.
Just surprising Brains with over 100 years history and a new Brewery in Cardiff were unable to keep the wolf from the door?
I was in Cardiff Saturday for the Wales/England rugby game and all the Brains pubs and others were doing very good trade, and this is not a one off there are many such times when there are concerts, football and rugby events on and the pubs are over flowing. I would think that Brains pubs are a good little earner for Marston.
Mmm, " well run company", not so sure, some of the current management have been in place when RF was in charge. Ralph Findlay made some aweful decisions, selling pubs, in a hurry, below market value, keeping SH's in the dark when Platinium made not one but 3 offers ( way above the current SP), agreed a rediculous deal with Brains, who were in serious financial trouble. The Leasing Agreement, with Brains is to run 20 years. Interestingly, just less than 6 months after the deal was confirmed, Brains placed the Freeholds of their Pub estate on the market..There is more too the story, I'll not bore you with it . Suffice to say the current management have inherited problems which have not served Shareholders well, hence the SP malingering in the low 30's.
On the face of it the SP is massively discounted against the NAV. That may appear an opportunity to make a substantial capital gain, however investors need to consider the other side of the coin........why have Asset Strippers not piled in, after all the SP has been in the low 30's for months. Any investor would be wise to research the background financials and contractual agreements (Carlsberg), which will paint a somewhat different picture.
Indeed.
But, I think we can agree that the current price is not toppy and that there are greater chances on the upside than on the down.
I come back to the basics. This is a well run and profitable company with a large real estate portfolio whose market cap is 1.5 times it’s profit and 1/3 of it’s NAV.
Not aware of an end date.
A lot could happen to your investment in the next 10 years.
Best of luck
Fair point.
Though they could dramatically reduce the debt by selling less than 50% of their estate.
Is there an expiry date on that term btw.
In any case I am quite relaxed about it and am sure that in the course of the next decade the discount to NAV will narrow substantially.
I’m not going to discount the possibility of a takeover but I am happy to let inflation and profitable trading reduce the debt over time.