Leading analyst Geof Collyer has issued a Buy recommendation for Greene King ahead of the brewer and pub operator’s interim results on 1 December, saying the market “seems reluctant to factor in the full benefits” of its strategic developments. Collyer, of Deutsche Bank, issued a target price of 635p and said: “The interims should show that the sector leadership still resides in Bury St. Edmunds.” He said the market consensus doesn’t seem to have taken into account Greene King’s like-for-like performance or its M&A programme this year, which includes the acquisition of Cloverleaf, RealPubs and Capital Pub Company. In its managed Retail division, Collyer said its most recent like-for-like performance (+4.3% for weeks 9-18 in H1) “places it at the top of the peer pack”. He predicted an increase of 19bps in the ebita margin, derived from the operational gearing of the original Greene King pubs plus the “more profitable” contributions from the M&A programme. In the tenanted and leased arm, Collyer expected like-for-like ebitda to be down 1% in H1, with average ebitda per pub up around 2.4%. In the brewing arm, he predicted that all major brands would outperform their categories. Collyer also predicted a 10% rise in dividend to 6.9p, in line with full year growth, although he said the board may decide to phase the growth to reflect the stronger H2 growth rate, “so +10% may be a bit high”. He also forecast a 23 bps decline in group ebita margin due to the changing business mix. “We are looking for margin gains in each division,” he added.