The M&C20 outperformed a falling market this week, losing 1.4% versus the All-Share which was down 2.4%. Since the M&C20’s inception in May 2013 the index has outperformed the wider market by around 30%.
This week saw the M&C’s big caps largely underperforming, with Greene King falling 4.2%, Marston’s down 3.2% and The Restaurant Group down 2.3%, more or less in line with the declines in the wider market.
Domino’s Pizza continued its strong run, rising another 4.5% this week. Some commentators have quipped that the price rise may be have been due to investors confusing the pizza chain with printing company, Domino’s Printing, which was the subject of a bid this week.
Enterprise Inns was up 0.4% while Punch Taverns gained 4.7% as the Market Rent Only option for pub tenants was debated in the House of Lords. The proposed amendment to carve out from the MRO pubs that receive significant investment from pubcos is a slight improvement in the general situation for tenanted pub companies, while the exclusion of franchise operations will have been well received by investors in Marston’s which has a large franchised estate.
Revolution Bars Group listed today at 200p, the bottom of its indicated range. The group has ambitious growth targets, aiming to go from its current 58 sites to over 140, and the female-friendly offer has attracted support amongst investors. There is, however, some doubt over whether the group’s growth targets are achievable.
Cineworld had a volatile week but ended up 2.8% as it reported its preliminary full year numbers on Thursday. Wednesday saw the share price dip down on anticipation of the results, however this was more than made up for in Thursday’s rise following the numbers - which saw a robust performance over what was a tough 2014 for cinema operators. The group has indicated that it should perform well this year given the outstanding film line up, and current trading was boosted by strong performances from the Fifty Shades of Grey film and Taken 3.
Next week will see the Chancellor present the Budget, and there is some hope for further good news for pubs as the previous two budgets have seen decreases in beer duty. There will also be big trading days in the form of Mother’s Day on Sunday and St. Patrick’s Day on Tuesday, though it may be some time before we know how they’ve gone for the industry.
Commentary by Will Brumby of Langton Capital
