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Marstons

December 2019

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

Marstons has sold 137 smaller (wet-led) non-core pubs for £44.9m, equivalent to £328,000 per site in line with its plans to raise £70m from disposals this year and reduce net debt by £200m by FY’23 as it pivots from new build expansion to supporting its generous 7.5p dividend (yield 6%) in the tough climate. The buyer is Admiral Taverns, which owns an estate of 950 pubs.Valuation wise, the portfolio has been sold for 9.4x EBITDA or 12.2x operating profit, which is attractive although it was also 28% below book-value of £62.6m. Nevertheless, analysts say this reflects under-investment eating into these pubs’ profitability in recent years and isn’t indicative of the quality of Mar ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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Marstons

December 2019

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