The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
If Marstons are receiving a couple of hundred million for their 40% and Sandyman you have worked this out to be for their share then that values the whole deal at 102.50p a share? Please also remember this is only for the Brewery distribution side of the business, the 1200 odd Pubs, etc that are also owned by Marstons in freehold. i.e not leased will increase the share book price further outside of the JV deal. Whatever way one looks this is one cheap share at the moment only cheap because of a temporary situation. Longer term this has tremendous upside where I anticipate the share price will at least double, as do many other fund managers.
I have seen this share price fall to 41p (where it gains support) and then recover back up to 51p very quickly. You do not have to be a scientist to see that when large fund managers such as standard life/p/o Aberdeen Asset Man, have this as a growth stock to their savings/pensions schemes then it will have support particularly towards the end of the month in line with pay rolls.
Sentiment will also improve later with the Feds announcement regarding further impetus.
But the SP will soon be under 20p, but in due course will recover to 41p
According to Company accounts debt amounted to over £1.3bn as at 30th September 2019, loss for 1st half to 31st March 2020, increased temporary facility of £70m.
Although there is value in Property assets, from recent disposals they have been overvalued......the sale to Admiral came with a significant discount to book value. It would be no surprise that the estate is being re-valued to satisfy Lenders.
Whitbread are in predatory mode and looking to cherry-pick sites that fit it's portfolio........they have a significant "War-chest".
The company ( MARS) have many sites (Pubs) which are at or below break-even and therefore classic candidates for disposal.
If the Estate is worth anywhere near the figure being quoted, are shareholders too expect a windfall dividend!!!!!
At present, with the SP at almost the same level as the JV cash injection, the company's entite estate net value after debt £1.2bn, and the curent brewing business, valued at £580m (13x adjusted 2019 ebitda of £44m), are thrown in for free. The estate is worth £1.75 a share, so even if substantially discounted that's a huge reserve. People forget that property can be sold and that Marstons had a brewing company that does not rely solely on sales through its estate!
Fair post. I am also equally amazed as to how many companies that you would have thought prior were fortresses with thousands of employees which must be solid as they float on premium markets have succumbed and on the brink after just a month of no trading.
As warren buffet says, "Theres nothing like an outing of the tide to expose those who were swimming naked". The amount of butt naked companies who were swimming close to the shoreline is a real eye opener.
I still believe there is compelling value to be had at MARS, MAB, JDW and others. As you said, in a recession these are usually the safe haven assets. In a post covid depression, these could come to life but will be slow going whilst covid looms. The risk here is purely down to the fact that if the UK went on lockdown again, it would be game over for the industry as we know it.
It's just a matter now of weighing up these variables, and deciding whether MARS has the required risk/reward ratio to warrant an investment. Personally for me, the reward now outweighs the risk in the medium term but with the caveat that I am willing to write off a large chunk of the investment, which acts at a natural cap to prevent overexposure.
With the daily rate of infections still falling and with the Government ' Eat Out to Help Out Scheme ' I can see August being a very busy month for Marston's, the UK is now embracing and adapting to the new guidelines and rules which is breathing life into the hospitality sectors which is good news.
I think also with the growing uncertainty of going abroad many families won't take the risk so this will boost UK tourism and we all know that taking the family out for a Sunday carvery is a religious sacrament so I hope Marstons have the carving knife ready as I will be first in the queue.
I do not have the same worries as others here obviously. All I request is now the doors are open again at the pubs that the BOD announce how the sales are now going to bring in additional useful cash flow.
One advantage we have here is cash flow from various sources, which is more than many an airline or travel company can say. Certain caveats or conditions can simply be written in to any deal with Carlsberg to keep CAMRA happy, but I would certainly not now be giving them a club discount! Certainly not a Club sandwich. I can see certain pension fund managers have their toes in the water here, and whilst at the moment they will trickle funds in here when the World turns away from Gold ETF's back into Equities (which could be soon as even the previous metals will turn sooner or later) then this share will rock. Fortunately I have time in my side.
In times of Depression, and make no mistake that is where Global Economies are heading, safe investment havens, apart from Gold, have always been Food and Drink. I will add one further caviat, value of assets and reserves. It has been truly amazing how quickly many Companys and Individuals were in trouble within less than a month after Lockdown. They literally had little or No reserves. I don't believe that situation has been present in previous recessions. In fact it is apparent debt has been running at unsustainable levels. Marstons are no different they had over-borrowed in acquiring Charles Wells, and continued to pay high dividends which some of us questioned.......would have been best to pay down debt and reduce shareholder payments. Under such a Policy, imo, sooner or later a Company paying dividends at the expense of Corporate debt will come unstuck.
If the dividend is to be resurrected within 2 years i.e July 2022, the year end being 30th September , it would be an interim div for the year 21/22. We do not know as yet how company revenues are rejuvenating. It is speculation but reasonable to believe the current year will be in deficit. So that begins us to yr 20/21 where revenues should increase but the unknown carry forwards will be reduced.
It is impossible to predict profits at a level to enable Dividends to be restored. There are many factors to be considered.most impossible to forecast with any accuracy.
As mentioned some while ago, following the CMBC agreement, Marstons have got to re-invent itself to re= build Shareholder value.
Caution is to be had across the board and within all companies.
The same argument and caution would have been paramount back in 2002 and again in 2009 - the dividing factor between which is was the hold intended for 5 days or 5 years.
As to answer fairdeals question I would expect the dividend to be reinstated within a couple of years tops, and with the SP at that time to then be sat much higher than it currently is today.
As to the divide between bulls and bears I’d contrast it more akin to longs vs shorts - traders vs investors. I can hold through a paper loss now if the end result is an even greater profit later. If anything I’d be increasing my position on weakness rather than getting myself in a twist, you know.
Pitter patter
I agree with Fairdealers caution, because what must be realised is that the world rather changed in early Spring for UK co's, but for Marstons it changed beyond any reasonable risk assessment could have ever invasged.Supermarkets can sell online, but Marstons pubs can't sell much online, can they ?
Thus the deal with Carlsberg which many regarded as a disposal of control of the jewel in their crown left therump mars as owners of a string of pubs, motels and a few pitcher & piano bars plus a debt mountain; whereas pre the deal on the jv, Marstons were the largest brewer in the UK, quite a difference to what shareholders owned pre lockdown. Of course the bulls will disagree but I fear holders are in choppy waters at present.
Many bought on dividend yield 2-3 years ago when the SP was above £1.
When do you think MARS will return to the Dividend list?
Yes I was just looking for a clearer picture on that. He took another £100k worth back in 2018. Can see plenty of director buys but no sells. Most likely all holding for the forward looking dividends right, I mean who could blame them.
At current SP this would come across as massively undervalued on a forward looking basis irrespective of the JV, that being the icing on the cake.
Remember the Chairman bought before the referral and consequential delay. Banks do have a whip-hand especially when temporary funding conditions are not met.
I love the use of the word could in that statement.
Bulls will be looking at the positive could‘s just as the bears are focusing on the negative could’s.
Time will tell. If I was a chairman on the other have I would not be putting in £50k of my own money if a RI could be imminent ^^
Bulls should examine the Finances.
The company is heavily borrowed. The delay in Carlsberg completing creates not only uncertainty but the company could be between a rock and hard place.....£70m temporary facility agreed in May is due for repayment in 180 days. The delay in JV completion is likely to be causing some head-scratching at HQ.
CAMRA have history, they referred Marstons aquisition of the Charles Wells brands some 3 years ago, whereas it is very frustrating any delay in funding at these uncertain times does make the Market nervious.
Whether is is liked or not the possiblity of a Rights Issue grows as each day goes by......Banks are in a position to require some kind of Fund raise. A Placing would not be in the interests of Shareholders.
Carlsberg are not interested in whether or not MARS raises funds, they are only interested in the Breweries and Brands, Marstons are left with Pubs and Motels which were due to have £90m spent on capital works this Financial year.
Until we know how revenues are rebuilding it is difficult to see the Company going forward without additional funds
JT - I don't think this share will be worthless even if the Deal with Carlsberg is stalled, as unlike other Pubs/ Hotels Marstons also produce their own beer, and so they have a form of income - whether the pubs are open or not? However I see from the Marstons own web site they see a failure as a remote chance and even want to introduce a new beer as a result.
As I have seen them now selling beer online with Comps such as Amazon, as well as all of the major supermarkets I actually feel they could do well with future drink sales too, and as we expect hotter weather this weekend this will help here too.
Sure it is because the delay in the JV going ahead, and hence creating uncertainty it will? If it doesnt it will be worhless.
Compared to other pubs, this has dropped the most, so its not an industry wide reason the steep decline in the past few weeks?
Correction Thousands and thousands are now considering staying in the Uk for holidays which will help Marstons.
In fact many are not even considering going abroad.
The BBC news has just announced thousands and thousands of people are not re-considering staying in the UK this year which will help Marstons. In fact they should now see a seasonal uplift in bookings. More bookings and more food and drink consumed where the business would otherwise have been taken abroad the money will stay in the UK.
I feel all we need now is an update from the Marstons board as to how events are now in fact unfolding and many will be surprised.
Why would they need any rights issue, if they did want one they would have done it well before the Carsberg deal. Can you imagine just how that would look to Carsberg. Marstons needing more money after doing a deal with them, doesn't show confidence does it.
With this deal now being completed in Oct - Dec the last thing they will need is more uncertanty in the market. Foreget any issue.
These small trades have almost certainly come from a user of the Freetrade app (or similar) which provide commission free trading for any amount of shares down to a single share (yes, if you have 42p in your Freetrade account you can buy a single MARS share commission free). Originally the app used to batch up all the commission free trades and submit them all from 3pm daily so on some of the popular shares you'd see dozens of these tiny trades rolling through from that time, but more recently I believe they push the trades through throughout the day so you can see these tiny trades anytime.
Maybe MM signal codes have some meaning years ago, but not sure anyone has taken them seriously for years now. However if there are some who do still believe in them then the advent of these latest trading apps allowing tiny trades means such notions ought to be consigned to the dustbin pronto.
Check his chat history - Says it all. It’s either headed up if he’s in or emergency rights issue at much lower SPs if he isn’t. Absolutely zero substance
Marstons have secured facilities upto Nov 2020 with funds from Carlsberg due once complete. How did you get a 25p RI value?
Find it strange the company is valued at roughly the same price as the JV price for 60% of brewing business now it's delayed ?? I'm outa here smell a rat