Langton Capital – 2015-11-13 – Daily Wrap: Pubs’ Code, Punch, Just Eat, telescopes & 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:
Pubs code etc.:
• Whilst reading nuances has perhaps never been Langton’s strongest suit, the body language of various concerned parties re the Statutory Pubs Code and the associated Market Rent Only option does seem to suggest that there may be some softening in the proposed impact
• Brigid Simmonds at the BBPA has suggested that some MPs may be regretting voting in favour of the legislation. She has said that recent discussions have been ‘productive’.
• Dr Cable has gone & the House of Commons is a much different place post compared with pre-election
• Punch seems willing to work with the legislation
• Others have pointed out that the need for parallel rent assessments may be quietly dropped
• Some hope that MRO options will only be available when it is proposed that rents rise – and at a time of no-flation, this may be never
• It’s also clear that both Punch & Enterprise will manage units and hence they will have the right to take units back at the end of their leases (the average 15yr lease should have 7.5yrs to run, in fact less as no new ones are being granted as others continue to mature) meaning that the MRO would exist only for a short period of time
• And on the other side of the debate, Mr Greg Mulholland seems to be getting his knickers in a twist whilst the Pubs Advisory Service has said that it will resist attempts to ‘rail road tenants into consulting on a deeply flawed document’
• Fair Pint has said that it is concerned that the current consultation fails to honour the letter and spirit of the Small Business, Enterprise and Employment Act.
• As Punch pointed out yesterday, the rules will not be finalised for some time and the financial impact will not be clear until a while after that.
• It mentioned end-2016 ‘at the earliest’ but, whilst this is realistic and we accept that the market does not relish uncertainty, we think that the business impact of the proposals may be less far-reaching than had hitherto been imagined
Just Eat shares fall on placing:
• Just Eat shares fell yesterday on stock placing.
• Always hard to price such ‘disruptive technology’ stocks meaning that, when directors or founding shareholders sell, others may be inclined to take their lead.
• However, Just Eat does seem to have captured a large part of a large market. The latter should grow & JE could and indeed should grow with it.
• Whilst valuation may remain more of an art than a science, we could see ourselves becoming interested if the shares fell much further.
Random information, hopefully not all of it useless (re most leisure operators etc.):
• Markets had their worst day since September on Thursday. Interesting to see that the top-10 FTSE100 ‘risers’ included 5 shares who’s prices actually fell yesterday
• Sterling up vs US$ and Euro despite Haldane comments to the effect that UK rates could go either up or down at the next move
• Copper & gold prices now at 6yr lows. No wonder the miners had a bad day Thursday.
• Oil price testing new recent lows.
• Other commodities in a rut. Precious metals, non-ferrous metals & soft commodities all weak with the exception of El Nino-impacted products such as sugar, cocoa and Orange Juice. Hence your Terry’s Chocolate Oranges may be costing you more in future. However, if you want to drink your unsweetened coffee from a gold beaker, you’re laughing.
• John Lewis has reported that, following the launch of its Christmas TV advert, it has seen an “unprecedented demand for telescopes”.
We’re so 21st Century, this morning’s Tweets (diff. font size denotes importance):
1. M+C reports tenant organisations to be asking for more time to respond to the pubs code consultation as they will be busy pre-Xmas.
2. General feeling that pub code rules being watered down. Tenant organisations complaining, asset owners more sanguine
a. M+C reports BBPA CEO Brigid Simmonds as saying many MPs now regretted voting for the MRO
3. Punch numbers met with relief + Press generally supportive, focussing on re-fi and underlying profits, new operating model etc.
4. Just Eat shareholder Index Ventures has sold 25m shares in the group at 440p per share.
5. Thwaites has enjoyed an ‘excellent’ first half of the year to the end of September, generating turnover of £45m
6. Bibendum Wine CEO Michael Saunders has predicted more ‘seismic’ changes in fragmented UK wine sector following wave of consolidation.
7. M+C reports BBPA CEO Brigid Simmonds as saying many MPs now regretted voting for the MRO
8. Castle Rock Brewery has opened its biggest pub, The Embankment, former home of Boots Social Club at Trent Bridge, Notts.
9. All Leisure is proposing to sell + leaseback the Hebridean Princess cruise vessel to private investors led by chairman Roger Allard.
a. All Leisure to receive £2.9m for Hebridean Princess + lease back for £500k p.a. to end-Dec 2023
10. Greek workers have staged a general strike against recently imposed austerity measures. Transportation services have been disrupted
11. B of England’s Andy Haldane has said the UK’s ‘economic aircraft appears to be losing speed on the runway’
a. B of England’s Andy Haldane comments seem to suggest UK rate rise could be postponed. May impact Sterling