Langton Capital – 2016-03-16 – Daily Wrap: JDW buybacks, tour operators, product evolution & 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 another 80k at 697p on Tuesday.
• Takes recent total to 1.37m shares for £9m (av. 653p per share).
• Interestingly JDW has therefore retired around 1.2% of its equity in the latest round of buybacks starting in Jan this year
• Amazingly, the group has not far off halved the number of shares in issue since it started buying them back in serious volume in 2004
• Following both recent buy-backs and small issues of shares to satisfy option entitlements, there are 117.9m shares in issue
• When the group gets to 112.5m shares or less, surely the co should throw some sort of party?
• Because by then it will have used shareholders’ money to buy back half of the shares in issue – hopefully to the benefit of those shareholders that have hung on
• Big broker downgrade alert.
• Says sees threats from weaker UK demand, pricing pressure as airline capacity goes up and cost pressures from resort hotel owners
• All true – and big brokers do have the power to move prices (at least in the short term) – but we would suggest that 1) supply & demand balance is perhaps the key issue in determining profitability and that 2) TCG’s China JV with Fosun has the potential to transform the company over time
• Of course companies that focus on the long-view can trip over if they ignore short term problems
• But we would suggest that, when Chinese visitor numbers across Europe have risen to much higher levels in a decade’s time, we may be looking back and telling ourselves that it was obvious where we should have been putting our money
COMMODITIES, COSTS ETC.
• Oil price kinda stable, gold price kinda not.
• Oil sitting at around the $39 level. Gold now costing around $1,232 per ounce having failed (again) to break through the c$1,280 level.
• Gold / Oil ratio (how many barrels of oil it takes to buy an ounce of gold) now sitting around 31.4 versus 32.9 this time yesterday and 34.5 on 4 March.
EVOLUTION – CHANGE REMAINS THE ONLY CONSTANT:
• Today we report (see earlier email) that coffee shops and grab-and-go food outlets are still booming.
• Also reported that night club charges have dropped out of the CPI calculation due to their diminished importance.
• And earlier in the week, report that young people are more likely to grab a coffee than to grab a beer.
• And it’s not, we would suggest, just about the money. There may be sectoral shifts going on here.
• So lesson may be to focus on coffee, soft drinks, free WIFI and contactless payment systems. Less on glitter-balls, smoking solutions and on producing the best pint of mild for under a quid.
RANDOM INFORMATION, HOPEFULLY NOT ALL OF IT USELESS:
• Hoping for another 1p off the price of a pint later today.
• Fed Open Markets’ Committee meeting yesterday and today. Will announce 6pm our time. Live odds on no change = 98%. Betting on June is 57% in favour of a rate rise at that time.
• Sainsbury Homebase put-up-or-shut-up is this Friday. New terms may be pending.
THIS MORNING’S TWEETS:
1. ALMR calls on HMG to clarify details of future wage increases in order to provide visibility for the hospitality industry.
2. JDW buys back more shares, retires 80k at price of 697p. Takes recent totals to 1.37m retired for £9m (av. 653p).
a. JDW has retired around 1.2% of its equity in the latest round of buybacks starting in Jan this year
3. Pull’d has launched a second crowdfunding campaign with a target of £350,000 in exchange for 36.42% of the diner’s equity
4. New research from PwC and The Local Data Company shows that takeaway food stores and coffee shops continue to flourish
5. Evolving trends lead ONS to drop nightclub prices from official inflation figures. Sites closing or moving to free or low-cost entry.
6. Scientists claim to have found a new way to use natural chemicals in beer hops to potentially help fight cancer and other diseases
7. Gruppo Campari is to purchase French-based spirits producer Grand Marnier
8. Sports retailer Go Outdoors is moving into cycling with its Go Cycling department set to be introduced in its UK locations by end May.
9. The British cruise market is closing the gap on Germany as Europe’s premier cruise nation, according to industry figures for 2015.