Langton Capital – 2016-03-15 – Daily Wrap: JDW, Restaurant Group, tourism vs terrorism & other:
Leisure Wrap & Other:
So the trading day is grinding to a close. We’re another day older but are we any wiser? After a day of intensive head-scratching, pen flipping and gossip, we have been considering the following. As always, contact us if you’d like further details:
• Group still buying back shares.
• Bought back 50k at 699p on Monday.
• Takes recent total to 1.29m shares for £8.42m (av. 650p per share).
• Recent buy-back commenced in Jan with the purchase of a whopping 625k shares at the bargain basement price of 613p.
• Group is clearly putting its money where its mouth is.
• As long as this continues, we are unlikely to see a blip-up in the rate of new builds.
• Co said at its H1 numbers that ‘around 15 unite per annum’ could be the norm for a couple of years at least.
TOURISM & TERRORISM:
• Egyptian authorities saying that tourism flights to Sharm will resume ‘sooner rather than later’.
• We’d bet modest money that that turns out not to be the case. Bombs in Ankara (yes, we know that’s in Turkey rather than Egypt) will not help
• Holiday programmes have been re-scheduled (at great effort but at modest financial cost) and this won’t flip on a sixpence
• Perhaps such comments should be caveated or asterisked with the words ‘this is our hope rather than our expectation’.
• Elsewhere, the Western Med is selling out and, with margins thus firming, the holiday majors should be heading towards a satisfactory summer season
• We see nothing to dissuade us from the view that the UK hotel cycle, particularly that in London, is past its peak
• STR yesterday reported that, regarding new-build, there were ‘163,826 rooms in 1,139 hotels Under Contract in Europe’
• It says ‘the total represents a 14.9% increase in rooms Under Contract compared with February 2015 and an 8.6% year-over-year increase in rooms In Construction.’
• Capacity is therefore on the up.
• STR continues ‘among the countries in the region, the United Kingdom reported the most rooms under construction with 14,785 rooms in 178 hotels.’
• The number of rooms under construction in the UK was 1.5x that in Germany, an economy that is around 1.5x that of the UK
• REVPAR looks to be still rising but, with occupancy under downward pressure, we would expect rates to follow at some point this year
RANDOM INFORMATION, HOPEFULLY NOT ALL OF IT USELESS:
• Equity prices down today after rise yesterday. Whitbread putting in a bit of a bounce but Restaurant Group rather less so. Share price still pants.
• Betting stocks down yesterday as somebody realises there’s a Budget tomorrow.
• Oil price off the ‘top’ & trading around $39 per barrel.
• Gold-Oil ratio reasonably stable as the prices of both commodities fall. Ratio now means takes 31.9 barrels of oil to buy an ounce of gold. Yesterday it was 31.6.
• Gold price off the top. Trading at around $1,233 per ounce. Once again fails to break through the c$1,280 level.
• Soft commodity prices up a little on US$ weakness.
THIS MORNING’S TWEETS:
1. JDW buys back more shares, Mon bought 50k at 699p. Takes recent total to 1.29m shares for £8.42m (av. 650p per share)
2. Brewhouse and Kitchen has taken a lease on a 5,000 sq ft site at The Brewery in Cheltenham.
3. Minimum wage may ‘stretch’ parts of the economy reports the Low Pay Commission. Says some areas, such as care homes, could be hard-hit.
4. Tossed has launched what it claims is Europe’s first cashless food-to-go outlet on Coleman Street, fitted with self-service kiosks instead of manned tills.
5. McColl’s Retail Group has opened its 900th convenience store, in the village of Kemnay in northeast Scotland, as part of its aim to reach 1,000 stores by the end of 2016.
6. Ocado. Still no news of Ocado’s much sought after international deal
7. Sainsbury’s Q4 trading statement shows the first quarter of LfL total retail sales ex. Fuel (+1.2%) in over two years
8. Egyptian tourism bosses are hopeful flights from the UK and Russia to Sharm el Sheikh will soon resume
a. STR’s February 2016 Pipeline Report shows 497,409 rooms in 4,057 projects Under Contract in the United States, up 14.2% y-o-y
b. Europe had 163,826 rooms in 1,139 hotels Under Contract in February, up 14.9%.
c. Latest Hotel Price Index from Hotels.com shows that the average cost of a room across the UK rose by 4% last year.
9. Kuoni FY numbers, says sees ‘higher earnings from continuing operations’. Turnover CHF3.35bn, operating earnings CHF124m (+17.3%)
a. Kuoni FY: Says ‘completion of EQT’s public tender offer [is] expected by mid-year 2016.’ Restructuring ‘progressing well’.
10. A Chinese consortium has made a bid for Starwood Hotels, effectively gate-crashing the deal already announced with Marriott International
11. Gym Group reports FY numbers, says ‘strong revenue and profit growth + record number of new site openings [is] underpinning future growth’
a. Gym Group. Reports revenue £65m (2014: £45.5m), loss before tax £12.4m but adjusted proforma profits of £5.3m.
b. Gym Group: Says 19 gyms opened in 2015 (total 74) with one now opening per week.
12. The EY Item Club has warned that George Osborne could ‘make a weak economic situation weaker’ if he introduces more spending cuts
13. CBI says 80% of its members questioned in a survey want to stay in the EU