I bought into these in December last year, primarily for the yield, but also for the potential growth of one of the better companies in their sector.


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Marston's Fundamentals (MARS)

Peel Hunt Buy 98.33 140.00 125.00 Reiterates

Shore Capital Buy 98.25 - - Reiterates

Liberum Capital Buy 98.25 130.00 - Reiterates

Can anyone explain the acquisition to me.

Purchase 15 pubs at say £1m each. (I can't find out how much they cost. Aprirose website doesn't say and although they were acquired in July 2017 I guess, I cannot find an RNS from MAB). 15m + £4m refurb at 5% interest = £950k. If EBITDA is £1m then operating profit on them is basically zero.

I understand they will own the pub at the end of 40 years or whatever, but it doesn't seem a decent deal to me. One further wonders why MARS think they can make money out of them when MAB didn't and Aprirose are happy to shift them on.

Any thoughts? Is my £1m per pub way out?

The city appears to be screaming at MARS to pay down some debt but they keep doing the opposite !

I can’t comment on those numbers CC but as I understand it they are and have been for a number of years now trying to offload pubs with no accommodation and buying pubs with accommodation.

At the same time giving the running of those pubs over to people who have a high degree of autonomy. The newer model of pub/accommodation has/is and will be the best way going forward to make money, also to keep the English pub trade prospering IMO.

The accommodation side was actually the reason I bought MARS over the other brewers.

In one of my better moments when I was trawling through the accounts of all the Brewers I find the accommodation section in MARS and a light bulb went off in my head.

I shall patiently hold and see what happens. The challenge for me here is that I'm comfortable enough with the debt and it's structure, it's just that the market isn't.

All the wile interest rates are relatively low the debt is secondary at the moment I think.

Finals are 21st Nov.

I would also like to see the debt come down, trading looks ok, the quieter period before Christmas (Nov- early Dec) is yet to come but I'll stay put and nurse my losses.

As posted before, I've been in these since 2011 - in fact at a price not too different from where we are now!

As I've highlighted in post 289, rising interest rates and their lack of willingness to pay down debt is a worry.

As the venue for the AGM is about 10 miles from where I live I'm going to go and inquire a bit more about the directors attitude to debt. I know from the radio interview they are comfortable with it and accept the city aren't but that's not helping the share price.

I suggest it would be helpful if they were a little more persuasive in explaining why they are happy with the debt when others aren't.

AGM was in January last year so not so long to go.

Annual General Meeting: 23 January 2019.

I can understand the debt concerns by the market and private investors but it really is a priority to fund their roll out of Pub/Accommodation pubs at least in my view.

I've said before on here that having stayed several times in their accommodation pubs I was very impressed, also people are not frequenting pubs like that used to so getting people to stay and providing a really good service on food and Ale is a winner.

If rates do go up I suppose they can then cut the divi accordingly without it interfering with the roll out.

If you do go CC I will be interested to hear what your view is after, The boy Findlayson is the chap to talk to if you can,

JP Morgan Cazenove Overweight 98.70 130.00 125.00 Reiterates

Liberum Capital Buy 99.35 130.00 Reiterates

Liberum Capital Buy 101.30 130.00 Reiterates

Deutsche Bank > 6%

Deutsche bank reduce https://www.moneyam.com/action/news/showArticle?id=6193168

Standard Life Aberdeen plc reduce https://www.moneyam.com/action/news/showArticle?id=6199611

Preliminary results https://www.moneyam.com/action/news/showArticle?id=6214455

Divi maintained @ 7.5p; PE 7; Market is underwhelmed.

Same as everything else on the market George.

"Slow and sure, going in the right direction" might be a good phrase. Nothing surprising, nothing unexpected. Very clear commitments over debt which one would have thought would have helped but clearly didn't make any difference.

Not much for me to do. Collect my 7.5% dividend wait for market attitudes to change. If they don't I'll just keep collecting my dividend.

FWIW :-

Peel Hunt Buy 99.15 125.00 Reiterates

Liberum Capital Buy 99.15 130.00 Reiterates

Shore Capital Buy 99.15 Reiterates

Yes CC you are doing what a lot of other holders are doing at the moment I suspect.

Just noticed that todays volume is above what it is usual for these in recent weeks.

Hit 105 for a few minutes earlier. Bit of a retrace now but will be interesting to see where it finishes today.