 The beer comes from Marston's (MARS) who had a reasonable looking trading update for the 41 weeks to 18 July 2015. This saw their destination & premium locations as well as their taverns reporting positive like for like (LFL) sales growth of 1.7% and 1.6% respectively. Encouragingly they had seen stronger trading in the last 10 weeks with +2% LFL, operating margins up slightly year on year and they are on track to open 25 new pubs. Meanwhile they continue to dispose of lower return wet led pubs and move more towards franchising some of these. Their brewing side also grew by 4% and was this boosted to 10% by the acquisition of Thwaites during the year. They made some interesting comments on the effects of the proposed living wage which has been seen as a negative for the general retail and hospitality trades. On this they said: "The recently announced Government plans to introduce a mandatory Living Wage by 2020 are consistent with our expectation that the gap between the National Minimum Wage and the Living Wage would be closed over time. The additional cost of meeting the higher target of £9 per hour by 2020 will mean that wage costs will be modestly greater than we had expected, but the impact compared to our plans is mitigated by the fact that we had anticipated increases above the rate of inflation, and the lower rate of corporation tax from 2017." The shares are a bit of a curates egg as they have drifted back recently below 160p where they trade on around 11 to 12x earnings with a yield of 4.5% which is expected to grow by around 5%. The yield and the shareholders 20% discount remain the main attractions on this one, however the balance sheet is quite highly geared albeit they do benefit from some reasonable property backing.  Meanwhile if you've got bills you've gotta pay then you may have come across or used one of Pay Point's (PAY) terminals in one of the 27,000+ shops that they operate in. They have had an in line Q1 IMS statement today showing modest growth so probably nothing to get too excited about there in the short term, although the shares have responded positively first thing being up by about 1% in a weak market. So it seems like steady as she goes but I should have more to say on that tomorrow. The chat part today comes in the form of Q1 trading update from the Quad play telecoms provider Talk Talk (TALK). In this despite only delivering 3.5% revenue growth they say they are confident in delivering 5% for the full year together with strong EBITDA and free cash flow growth. They did however warn that H1 would look weak and that much of the growth would be h2 weighted due to the timing of the delivery of their on going (MTTS) cost saving plans. The market doesn't seem to like this that much as the shares have been marked down by 6% first thing as it seems to be a familiar pattern of jam tomorrow with this one as they continue to invest in growing the business. Despite this they have continued increasing the dividend rapidly and the cover has therefore eroded to around 1x. Thus the strongly growing 4% yield seems attractive on the face of it, but it may be vulnerable to the forecast growth slowing or stopping if they don't end up delivering the growth in profits and cash flow that they are expecting. Otherwise the shares don't seem that attractive on other valuation metrics like the PE of 25x so a hold at best for yield I would say. Finally before I go we had a quarterly update from Easyjet (EZJ) which saw better revenue per seat than the guidance they issued in May. The better than expected revenue per seat was driven by trading in the UK and beach routes across Europe in May and June & the successful implementation of revenue management initiatives, offsetting in part the impact of the movement in Easter and the French Air Traffic Control strikes in April which together decreased revenue per seat at constant currency by three percentage points. They also grew capacity, passenger numbers and the load factor. So it seems quite positive overall and the market agrees as it has marked the shares up by 4% this morning to 1736p where it is climbing nicely toward the 1800p price target I set when I suggested it as a trading buy earlier in the year when it was below 1600p in my Prepare for boarding post, I hope some of you got on board and are enjoying the flight too. Any way must fly got some plumbing to try and turn my hand to - toodle loo. 
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...in the shape of Britvic (BVIC) & Marston's (MARS) who have both reported updates via an IMS and an AGM respectively.
Britvic suggested a continuation of challenging trading conditions in their core markets which they had alluded to in their previous update in November last year. Despite this they say they are still confident of delivering EBIT in the previously stated guidance range of £164m to £173m, underpinned by cost saving initiatives. I last wrote about this one back in October last year when the shake out in the market at that time had, I suggested, left it looking better value and that it was a reasonably defensive play at around 600 pence. After today's update the shares seem to have taken the statement quite well, so may be something worse was expected so they are perhaps having a relief rally. This leaves them up by about 5% at pixel time to around 680 pence. So with the final dividend that went xd in December they have given a decent 15% or so return since the low in October - sweet, like some of their drinks. Talking of which I saw the other day they are going to stop making their full sugar Robinson's. This seems to be part of a relaunch aimed at addressing the obvious health concerns about sugary drinks. Overall this leaves it looking fair value on around 14x & 3.5% yield now based on this years forecasts and a EBIT/EV yield of just over 7%. This puts it in the second quartile of the Compound Income Scores with most items looking fairly average, although it was looking oversold before today so maybe hence the pop. Thus probably a hold for me here rather than a buy now. Meanwhile Marston's the brewing and pub company reported some good trading over the Christmas period in it AGM, with profitability in line with their expectations. In Destination and Premium, like-for-like sales were 2.0% ahead of last year with both food and drink like-for-like sales growth of 2.0%. In Taverns, managed and franchise pub like-for-like sales were 2.0% ahead of last year, with 2.7% growth over the Christmas fortnight and 5.8% growth on Christmas Day. While in leased pubs, profits were around 1% ahead of last year. Finally in Brewing, performance has been strong with Group Ale volumes up 4% in the year to date, underpinned by a very strong performance in the off-trade, with volumes up 8%. This one has had a less fizzy share price than Britvic over the last couple of years as it has flat lined around the 140 to 150 pence region. This is as they struggled to progress earnings, although now for the next couple of years ahead they are forecast to see these rise by around 8% per annum. This feeds into expected dividend growth of around 5% per annum for the next couple of years too. It therefore looks cheapish on 11.6x and 4.8% yield on this years forecasts but overall it does not score well on my scores ranking in the bottom decile due to its poor cover, finances and earnings revisions scores, where despite encouraging statements there have been downgrades since November. Thus it does not really pass my usual quality tests and as such I would not recommend it other than for the yield and some asset backing from their properties, although clearly there will be plenty more higher scoring candidates out there, cheers. |
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