One of the better Drinks industry Investments/trades.

Certainly got Momentum in its favour and we have a bottom triangle/wedge formation breakout.

First resistance level at around 500p.



dyor

GNK keep going down and Weatherspoon keeps going up - why?

Weatherspoons operating margins seem far better.

GNK and MARS weaker today may be due to final results at MAB

INTERIM RESULTS FOR THE 24 WEEKS TO 15 OCTOBER 17

Business highlights

· Further outperformance from Local Pubs, Pub Partners and Brewing & Brands in a challenging first half

· Strong cost mitigation: on track to deliver £40-45m of cost savings

· Brand optimisation delivering return on investment over 25%; Fayre & Square to be debranded by year end as part of our plan to reduce our value food exposure

· Spirit refinancing under way: new facility agreed, bond prepayment announced
· Pub Company volume trends improved post period end after £10m investment in value, service and quality

Financial summary

· Pub Company like for like sales -1.4%, Pub Partners LFL net profit +1.5% and Brewing & Brands own-brewed volume +0.3%

· Operating profit before exceptional and non-underlying items1,2 of £188.4m, -7.5% below last year

· Strong cash flow and balance sheet supporting attractive and sustainable dividend; dividend per share maintained at 8.8p

· 4.2x net debt to EBITDA1,2; fixed charge cover 2.3x; securitisation headroom in excess of 30%

· Group return on capital employed2 of 9.0%, well ahead of weighted average cost of capital

more.....

Peel Hunt Add 513.00 625.00 600.00 Reiterates

Shore Capital Buy 513.00 - - Retains

Liberum Capital Buy 513.00 720.00 720.00 Reiterates

i'm afraid this is a stinker as the chart shows

CC Send an email to CC View CC's profile - 26 Mar 2018 11:47 - 7 of 10 edit this post
Hi,

What do you guys use to do long term research into specific companies?

i'm interesting in GNK. I can get all the financial metrics from various places, broker targets from EQ and some of the market expectation figures from FT and 4Traders.

However, what I'm really looking for is a investment analysis piece. I ask because the share price I consider excessively bashed up. I understand anything retail is out of favour, impact of minimum wage etc. and rising interest rates on EBITDA, but what I'd really like to read is a balanced piece.

I'm prepared to spend a couple of hours reading the accounts, trawling the internet and getting my information that way but if I could find a summary of what someone had already done that would be great.
Chris Carson Send an email to Chris Carson View Chris Carson's profile - 26 Mar 2018 13:03 - 8 of 10
Not sure if this is what your looking for CC. Google Phil Oakley Article on Greene King (Third one down) How to do a SOTP valuation.
CC Send an email to CC View CC's profile - 26 Mar 2018 13:44 - 9 of 10 edit this post
Thanks Chris.

What I'm looking for is more a rationale for the existing share price and why isn't being shorted continually.

When that article was written in 2005 it shows an EBIT of £256m and implied P/E of around 14. The share price was 795p then and Phil Oakley suggested fair value as 788p so recommendation of do nothing.

Since then If I believe the figures from 4Traders the forecast EBIT for 2018 is £378m, a P/E of 8 as well a 7% yield.

I'm trying to get into the heads of those that are shorting to understand the detail. All I can see is that the gearing is high, the sector is out of favour and (rumours) others are taking market share off GNK. I have already bought a small amount of MARS which is fairing far better. I found an interview with the CEO helpful and the accounts showed some efforts to diversify.

GNK I find nothing to interest me other than a battered up share price which seems to be covered in more batter than would be reasonable imho.
CC Send an email to CC View CC's profile - 26 Mar 2018 13:49 - 10 of 10 edit this post
Perhaps I can phrase it another way. I made alot of money over the last 18 months on ALD and SHAW because I was comfortable I understood why the share price was bashed up and that the rationale behind it was wrong.

I'm trying to do the same thing here.

From 16th March :-

Morgan Stanley gives Greene King the 'Greene light'

Key financial information

Down another 2.3% today. Deutsche seem to be selling some shares

Still not sure what to do with GNK. Snow and cold weather will not have helped sales.

If we don't go to World Cup in Russia impact could be considerable.


I have researched some more and shortracker shows the shorts really piling it on. In particular Marshall Wallace are added to their short in volume. They have made some good calls recently and this leads me to be wary.

This is also interested. GNK in blue, MARS in red.


Short position GNK 10.5%, MARS 3.4%. Both are rising but GNK rising much faster.

Against the index...

Love the company. Market does not.

Still waiting to buy in.

Looking back Pubs went south long before the last recession 2007/ 2008

They are a good signal to where we are heading.

Let the hedgefunds have their day on this one.

They are probably correct for now.

https://www.telegraph.co.uk/business/2018/03/31/questor-solid-foundations-mean-soon-call-time-pub-firm-greene/

Questor has followed Greene King closely, recommending in December for readers to sell the shares.

Since then, they have declined 11pc and at this level are worth another look. Pub landlords and restaurateurs face a tough few years ahead but trading on eight times next year’s forecast earnings, it is too early to call time on this particular operator. Buy.


I'm still on the sidelines but mostly because I bought LLOY, STAN and SBRE in preference. I do have some Marstons so no desire to rush in. Waiting for a stupidly low price I guess

I bought MARS in 2011 @93.47p and sold half @164.28 in 2013 - I may well buy them again if they drop much further.

Green day :)

Good to see the shorters having some pain on this. I didn't buy in the end although I made a few quid off MARS a couple of days ago intra-day.

I continue to hold MARS and look forward to shorters suffering more pain on some of their reckless shorts.

Which gap first?

Not sure what you mean Skinny but GNK is off my radar now since it's risen 25% or so.

Me too CC, so I hope its the second gap.