Marston's (MARS)

[Bouleversee]

The following is an extract from an article headed "How to value shares" in the latest IC which I was able to get by googling the heading:

"Marston's ROCE for 2018 was just over 6 per cent, which is a relatively poor result and suggests that its assets could be overvalued. Its trailing 12-month EPS to March 2019 was 13.7p, which equates to a ROE of just over 10 per cent on the NAV per share of 136.1p.
This ROE might suggest that the assets are fairly valued. However, caution is needed here because ROE can be juiced up if a company has lots of debt, which Marston's does. For this reason, I always prefer to look at ROCE, which is not distorted by debt when weighing up asset values."

I gather there was a fuller article about Marston's results earlier in the year.

Not inclined to add to my loss-making holding.

[Hypster]

an article headed "How to value shares" in the latest IC

I remember that article; it was by Phil Oakley who had used Marstons as an an example company in his series about how valuable annual reports can be. I really enjoyed that series of articles. His book, called 'How To Pick Quality Shares' has a similar approach and is a good read for those that enjoy crunching the numbers.

[johnhemming]

For all of the reasons here I have sold out (about breaking even) from this stock. I am quite confused as to what they are doing with the interest rate hedging changes. I get worried as to whether taken it the round the charges are truly exceptional or more like an adjustment to underlying interest.

[idpickering]

Trading for the 16 week period to 18 January 2020 and update on debt reduction plans

Total managed and franchise like-for-like sales growth for the period increased 1.0%, reflecting continued growth in drinks sales offset by weaker food sales. Trading over the Christmas fortnight was strong, with like-for-like sales growth of 4.5%, compensating for more subdued trading in the first three weeks of December as a consequence of poor weather.

Costs have generally been in line with the guidance provided at the preliminary results in November. However, the recently announced 6.2% increase in the National Minimum Wage from April is higher than anticipated, and will increase second half year costs by a further c. £2-3 million.

https://www.investegate.co.uk/marston-- ... 00067865A/

[blobby]

Formatted announcement is here:

https://www.marstons.co.uk/docs/financi ... 012020.pdf

It seems OK to me and I don't really understand the market reaction (down 7p as I type).

* Debt reduction is well ahead of plan and seems looks like it will finish much earlier than promised.

* Beer Company has continued to increase market share in both the on and the off trade.

* Confidence for 2020

On the down side there will be some impact from the increase in minimum wage, but that will impact competitors and customers as well so I think it will be neutral or positive in the medium term.

[idpickering]

A bit ott the market reaction to this item imho, down 6.8% as I type. I hold in my HYP and shall continue to do so, but am unlikely to top up, mainly as they're a market cap minnow in my HYP.

Ian.

[monabri]

I'm not tempted to top up neither. I wonder how they can support the current dividend?

http://financials.morningstar.com/ratio ... region=GBR

The annual dividend of 7p per share is more than the free cash flow per share.

I hold MARS in an account that is frozen (SVS Securities - closed by the FCA in August last year, still ongoing with no access and dividends accruing but not touchable at the moment). I would have liked to have sold them a few months ago (price hike when GNK was acquired). Fortunately a small holding in the portfolio.

[Bouleversee]

That's a huge drop at present price (over 8%). Mitchells and Butlers who will also have to contend with wage increases are slightly up at the moment.

[idpickering]

That's a huge drop at present price (over 8%). Mitchells and Butlers who will also have to contend with wage increases are slightly up at the moment.

MARS are now down just over 5% currently, so perhaps settling down? Today's wobble won't deter me from maintaining my position with MARS. I'm investing new money into my HYP next Monday and it is tempting to perhaps buy some more Marston's. I'll mull that over this weekend. My account is set to buy more BP. on Monday currently.

Ian.

[monabri]

That's a huge drop at present price (over 8%). Mitchells and Butlers who will also have to contend with wage increases are slightly up at the moment.

MARS are now down just over 5% currently, so perhaps settling down? Today's wobble won't deter me from maintaining my position with MARS. I'm investing new money into my HYP next Monday and it is tempting to perhaps buy some more Marston's. I'll mull that over this weekend. My account is set to buy more BP. on Monday currently.

Ian.

I reckon BP would be a much better bet than MARS. I don't reckon that we will be saying goodbye to oil in our lifetime unless a real technological breakthrough were to occur. If you look at the increasing demand that the World has for energy and then see how that is made up (see below) then there would need to be such a breakthrough just to avoid going back to the middle ages.

https://en.wikipedia.org/wiki/World_energy_consumption

Coal (27%)
Natural Gas (24%)
Hydro (renewables) (7%)
Nuclear (4%)
Oil (34%)
Others (renewables) (4%)


p.s. BP at 6.45% yield and a market cap of almost £98 billion versus a brewery in Wolverhampton....

[Bouleversee]

I understand where you are coming from, Monabri, but perception and algorithms dictate the market price. We are going to need masses of electricity for cars, cookers, ch, aeroplanes and goodness knows what else and one wonders where it is going to come from but still oil shares are depressed. Nevertheless, I shall hang on to mine for the time being as long as the income is maintained. Whether I'll add requires further consideration.
I won't be adding to Marston's, however; that's for sure.

[idpickering]

Thanks monabri and Bouleversee for your input. I’ve made up my mind already, I still smiled at the brewery bit though, BP. It is as my top upon Monday. As for MARS, I will hold onto my shares unless they cease paying a dividend.

Ian.

[idpickering]

MARS dividend payment day. 4.8p per share. That's what it's about imho, although sp rises are nice, I'm willing to continue to hold and bank that dividend. Well, tbh it is reinvested but not necessarily back into MARS.

Ian.

[biffinsbridge]

Have topped up Mars today @ 107p using Jan divis. Bought 972. Could top up again by £1000 if & when Feb divis in. Regards Dick.

[idpickering]

Have topped up Mars today @ 107p using Jan divis. Bought 972. Could top up again by £1000 if & when Feb divis in. Regards Dick.

A sound move Dick imho. The company cap has always bothered me as it is very much a minnow compared to my other holdings, and why I originally had Greene King too. I sold GNK last year though, leaving me with just MARS. I'm happy to hold, but in no rush to top up further.

Ian.

[idpickering]

COVID-19 Update

Marston's provides the following update in light of the Government's advice to the general public earlier this week to avoid pubs and other hospitality venues in order to contain the spread of the COVID-19 virus.

For the 24 weeks to 14th March 2020, like-for-like sales in our pubs were 1% below last year. In Marston's Beer Company, beer volumes are in line with expectations. Although recent trading has been impacted by COVID-19, this has been marginal to date and pub like-for-like sales have been broadly flat over the last two weeks. That said, we anticipate that the Government's advice will result in significantly lower sales in the coming weeks.

https://www.investegate.co.uk/marston-- ... 00055382G/

[Wizard]

COVID-19 Update

Marston's provides the following update in light of the Government's advice to the general public earlier this week to avoid pubs and other hospitality venues in order to contain the spread of the COVID-19 virus.

For the 24 weeks to 14th March 2020, like-for-like sales in our pubs were 1% below last year. In Marston's Beer Company, beer volumes are in line with expectations. Although recent trading has been impacted by COVID-19, this has been marginal to date and pub like-for-like sales have been broadly flat over the last two weeks. That said, we anticipate that the Government's advice will result in significantly lower sales in the coming weeks.

https://www.investegate.co.uk/marston-- ... 00055382G/

It will be interesting to see how this is received by the market.

[tjh290633]

Up 30% this morning.

TJH

[Bouleversee]

Up 30% this morning.

TJH

But still down 79.43% on my purchase price a few years ago.

Ian P. left out this from his summary of today's statement:

"Recent statements from the UK Government suggest that the current state of much reduced social activity is likely to continue for several months at least. If that is the case, it is unlikely that an interim dividend will be recommended in May, retaining c.£20 million in the business."

Ian, you said earlier you would sell if they cut the dividend. Are you still minded to do so?

[monabri]

Up 30% this morning.

TJH

But still down 79.43% on my purchase price a few years ago.

Ian P. left out this from his summary of today's statement:

"Recent statements from the UK Government suggest that the current state of much reduced social activity is likely to continue for several months at least. If that is the case, it is unlikely that an interim dividend will be recommended in May, retaining c.£20 million in the business."

Ian, you said earlier you would sell if they cut the dividend. Are you still minded to do so?

idp sold yesterday.
viewtopic.php?p=291321#p291321

(I wanted to sell my at the time of the GNK buyout but they were in my frozen account - drat!)