The Government’s statutory code announcement this week had little impact on the M&C20 index as the leisure sector edged up 3 points to 1,231.
The All Share index was down 1 point at 1,064.
There was marginal growth for Greene King and Spirit, whose share prices increased by 1.3% and 2% respectively; while Punch Taverns saw a decline of 2.3% down to 10.75p and Marston’s was flat at 150.75p.
Leading analyst Geof Collyer of Deutsche Bank said the Government’s proposals are “good news in the long term” for Enterprise Inns, Marston’s and Greene King.
“Assuming that the proposals make the legislative calendar, we see this as a better outcome – having the uncertainty resolved now – rather than having the review hang over into the next Parliament,” said Collyer.
Douglas Jack of Numis said the impending regulation should have a “small negative impact” on Enterprise Inns and Punch Taverns, but overall make “little practical difference” to the pub operators.
Fuller’s saw a more pronounced increase, up 4.1%, having reported like-for-like sales across its managed pub arm up 8.3% and total revenue increasing to £288m in its full-year results today. Fuller’s profits have risen as food sales have played a more central role in the business.
Spirit’s increase of 2% to 79p comes ahead of its Q3 interim management statement next Tuesday, but has not yet reached the 110p target price recommended by Jack who predicted “strong” results for the pub company and issued a Buy recommendation.
Peel Hunt said Spirit is expecting a strong Q3 ahead of its statement: “Against a relatively weak comparator in 2013 and given the +8.3% for the first four weeks of Q3, we expect Managed LFL to be well on target to meet our 3.8% full-year expectation – although Q4 is a tougher benchmark.”
“We like the management team at Spirit and feel the 7.5x EBITDA multiple fails to reflect the momentum in the business and improved financial flexibility.”
Elsewhere the index was relatively static, among the climbers in the restaurant sector is Prezzo up 3.4% and Richoux up 7.5% to 26p a share. Following its impressive debut, Patisserie Valerie has slipped by 4.3% to 202p.
