Young’s could step up its acquisition of managed pubs if its mooted disposal of the Ram Pub Company goes ahead.

The expectation from analysts at Liberum is that such a deal would free up significant funding. “The return to positive cash generation should provide the catalyst to explore acquisition opportunities in the market,” the broker said.

Liberum said it expected a successful disposal of the leased and tenanted estate would increase the likelihood that Young’s would pursue other freehold managed pub portfolios on top of individual sites.

Liberum’s comments, in a note issued following Young’s results for the year ending March last week, emphasised that high pent-up demand and a busy sporting summer are likely to see like-for-like sales recovering back to normal levels in the months ahead.

The analyst said the fruits of the pub company’s investments, and ones made just before the onset of Covid-19, would provide impetus to the recovery in the coming months.

JPMorgan Cazenove also noted that management had strengthened its financial position, improved the managed estate and invested in technology.

“We do […] see the group is well positioned to benefit from the recovery,” it said.

It noted Young’s could add more value than expected through acquisition activity and a shake-out among weaker pub operators might offer the opportunity of market share gains.

Liberum warned, however, that cost inflation could put downward pressure on margins and any downturn in consumer sentiment following the pandemic crisis could inhibit a return to previous trading levels.

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