The City is braced for bad news from Luminar, the country’s biggest nightclub and late-night venue operator, when it makes a trading statement this morning (Monday January 20) after its shares fell 6% to 342p, a five-year low, last week.
The speculation is that food-led businesses, such as Chicago Rock Cafe, traded satisfactorily over the holiday period but the High Street bars and clubs may have struggled. It is also feared the statement could contain another profits warning.
Greg Feehely, leisure analyst at the City firm Old Mutual, said in a note to investors: “The recent share price performance strongly suggests further disappointing news is expected after downgrades at the time of the interim results in November last year.”
Feeheley said Luminar’s shares have underperformed by more than 40% over the past three months, after analysts downgraded their full-year profit expectations by 7.5%.
He said the company’s trading was somewhat sluggish in November, “and we believe this continued in to early December before picking up over the last crucial two weeks.”
However, Feehely said, “what is often overlooked with Luminat is the strength of its financial position.” Gearing was around 40%, while most of its peer group had gearing levels in excess of 100%, it had interest cover of nearly 5x and capital expenditure was more than funded by internally generated cash, so that debt levels are actually falling. There is also more than £160m of freehold property on the balance sheet.
Feehely told investors: “At current levels Luminar attracts a re-based December 2003 ev/ebitda multiple of 3.7x, against 6.0x at JD Wetherspoon and 5.5x at Regent Inns.
“This looks anomalous to us; if recently reduced expectations remain on track then there is no doubt financial buyers, with or without management, will be looking very closely at this business.”
The speculation is that food-led businesses, such as Chicago Rock Cafe, traded satisfactorily over the holiday period but the High Street bars and clubs may have struggled. It is also feared the statement could contain another profits warning.
Greg Feehely, leisure analyst at the City firm Old Mutual, said in a note to investors: “The recent share price performance strongly suggests further disappointing news is expected after downgrades at the time of the interim results in November last year.”
Feeheley said Luminar’s shares have underperformed by more than 40% over the past three months, after analysts downgraded their full-year profit expectations by 7.5%.
He said the company’s trading was somewhat sluggish in November, “and we believe this continued in to early December before picking up over the last crucial two weeks.”
However, Feehely said, “what is often overlooked with Luminat is the strength of its financial position.” Gearing was around 40%, while most of its peer group had gearing levels in excess of 100%, it had interest cover of nearly 5x and capital expenditure was more than funded by internally generated cash, so that debt levels are actually falling. There is also more than £160m of freehold property on the balance sheet.
Feehely told investors: “At current levels Luminar attracts a re-based December 2003 ev/ebitda multiple of 3.7x, against 6.0x at JD Wetherspoon and 5.5x at Regent Inns.
“This looks anomalous to us; if recently reduced expectations remain on track then there is no doubt financial buyers, with or without management, will be looking very closely at this business.”
