Anna Barnfather, leading analyst at Panmure Gordon, has said she expects Greene King’s wet-led estate to be outperforming its restaurants when it updates the market tomorrow, with “LFL sales flat to +1.0% with the outlook turning more cautious”.

She said: “Greene King will be the first leisure company to report post the referendum with its outlook statement likely to have implications for the wider sector. Like all consumer discretionary businesses, Greene King is vulnerable to a downturn in consumer confidence/spending; however, its freehold backing, low rent roll and self-help/ integration initiatives make it less operationally geared than most of its peers.

“We retain our Buy recommendation. Shares are off c18% over the last few days to now trade on 8.0x 2017E EV/EBITDA and PE 10.2x with dividend yield of 4.1%. Net debt/EBITDA of 4.1x. This compares with the current sector average of 9.8 EV/EBITDA and 15.1x PE.

“We expect Sales of £2,114m driven by LFL of 2.0% in Green King and 1.0% in Spirit, Adj PBT of £249m (consensus £248m-£252m) giving EPS of 66.8p and DPS of 30.6p. At the interim stage the company announced that they were ahead on Spirit integration and increased savings/synergies targets by £5m to £35m by 2018 (£12m in 2016) at a one off cost of £25m. We think that there is scope for additional savings above this level which could be announced as early as the prelims.”

Greene King plans to invest £40-50m of capex per annum into 300-400 Spirit managed pubs.

Barnfather said: “Assuming ROI of 20% (28% achieved historically) this equates to additional £30m of EBITDA. Additionally the business plans to spend £130-140m on core capex with a focus on brand optimisation, reducing total number of brands from 20 to 10 with a focus on Value. We do not expect these capex plans to be significantly impacted by Brexit and for the disposal programme to remain on track.”