A leading analyst has said that he believes Marston’s strategy of accelerating disposals of bottom-end wet-led pubs whilst allocating more capital to new build food-focussed managed pubs remains relatively risky given the step up in industry supply.
Ahead of the group’s FY 2013 results next week (28 November), Simon French at Panmure Gordon said: “We expect few surprises in the numbers following the detailed pre-close trading update and consensus expectations are for £88.9m PBT and a 6.4p dividend. Current trading should be relatively strong and we estimate c2.5% LFL sales growth in Premium & Destination pubs. The stock is not expensive, trading on a CY 2014E adjusted EV/EBITDAR of 8.6x and the yield remains an attractive 4.3%. We reiterate our Hold recommendation and 135p Target Price.”
The company’s Destination & Premium pubs reported 2.6% LFL sales growth for the last 11 weeks, ahead of consensus estimates of 1.6% and French’s forecast of -1%.
He said: “FY LFL sales increased 2.2% and operating margins were expected to be slightly ahead YOY. Performance in Leased Pubs had also been reassuring with an improved performance in H2 and profit flat YOY. However in Taverns performance was impacted by a subdued performance (i.e. negative LFLs) in tenanted pubs and an accelerated disposal programme. Therefore whilst managed and franchised pubs reported LFL sales broadly in line with the prior year (including +2% in H2), divisional profits would be lower YOY.
“We expect few surprises in the numbers following the detailed pre-close trading update and consensus expectations are for £88.9m PBT and a 6.4p dividend. We forecast £88.4m PBT and a 6.1p dividend. For FY 2014E consensus forecasts are for £93.7m PBT and we are broadly in line with consensus on £92.9m PBT.
“The stock is not expensive, trading on a CY 2014E adjusted EV/EBITDAR of 8.6x and the yield remains an attractive 4.3%. We reiterate our Hold recommendation and 135p Target Price.”
