Mitchells & Butlers PLC

[Bouleversee]

Moderator Message:
Discussion following from this post. - Chris

Why does this company exist? Improved profitability they mentioned in the trading statement. What they meant was a modest reduction in the trading losses. Does anyone here hold them? If so why?

Dod

I do, Dod. Have done so for quite a long time. At one point they were doing quite well but it can't be easy when your customers firstly daren't eat out because of Covid and then your costs increase massively due to high inflation but your customers now cannot afford to eat out after paying the increased costs of essentials with reduced incomes because of increased taxation in many cases. Unfortunately, we don't all have crystal balls.
They have been doing their best to attract customers with offers. Not sure what else they can do and not sure what I should do either. I'd like to think things will improve but wouldn't put money on it. If nobody invested in the hospitality sector, there wouldn't be one.

[simoan]

Whilst its' a bargepole share for me, it does trade at a significant discount to book value. Some value investors quite like these type of situations. I agree with your sentiment though and have no idea why anyone would want to invest in the UK hospitality sector.

It also of course depends on what ‘book value’ means. Hey would surely be doing their shareholders a favour by selling their assets at book value (that is if anyone would buy them at that price)

Dod

If you look at the balance sheet in todays results you will see they have real tangible assets in the form of over £4 billion of property. The current market cap is £1.33 billion. So, the shares trade at a decent discount to tangible book value (i.e. does not include any intangible assets, such as brands) even taking into account the financial debt and lease liabilities. Some people find such asset backing a comfort even when trading is otherwise poor.