Leading analyst Simon French has reiterated his Sell recommendation and 7p Target Price for Punch Taverns after its “slightly better than expected” trading update.
The company reported a 1.4% rise in like-for-like net income at its core pubs, compared to French’s estimate of flat, and average net income was also positive.
“At this early stage in the year, profits are in line with expectations and the group has reiterated its guidance for the full-year and therefore we expect no change to consensus expectations of c£45m PBT for FY 2014E,” said French, of Panmure Gordon.
“The stock trades on a CY 2014E adjusted EV/EBITDAR of 10.8x but with a market cap of £73m and c£49m of equity value from its Matthew Clark investment, the share price implies c£24m of value for equity owners in the two securitisation structures.
“Given the uncertainty around restructuring we think no value should be ascribed to equity owners. We therefore reiterate our Sell recommendation and 7p Target Price.”
