Thursday, 19 September 2019 12:11 GMT
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Glass half full for Marston's and Mitchells & Butlers JP Morgan reckons




(MENAFN - ProactiveInvestors) Pub groups Marston’s (LON:MARS) and Mitchells & Butlers (LON:MAB) both delivered stout performances their respective first-halves according to heavyweight broker JP Morgan.

Marston's which has some 1600 pubs and brews ales such as Pedigree and Hobgoblin said underlying pre-tax profit for the six months to April grew 2% to £29mln despite increased pension costs and disposals.

Rival Mitchells & Butlers whose pubs include Harvester and Toby Carvery posted a 4.1% rise in first half adjusted pre-tax profit to £75mln in line with expectations while total revenue climbed almost 10% to £1.1bln.

On Marston’s JP Morgan believes the firm is on track to achieve earlier pre-tax profit estimates of £92mln. 

The broker stayed ‘neutral’ on the business but upped its target price by 7p to 170p today. Shares currently trade at 164p.

Mitchells & Butlers meanwhile was praised for its food sales particularly breakfast offerings which climbed 2.9% on a like-for-like basis. Drink sales lagged and were up by just 0.4%.

“We have increased our operating profit estimate by 1% to £338mln for the whole of 2015 and by 2% to £355mln in 2016” said JP Morgan as it upped its share price to 470p from 450p.

Shares currently trade at 451p. 

Earlier this week JP Morgan analyst Alexander Mees said the UK pub sector despite its challenges offers good exposure to the UK consumer environment.

“We find the best performing pub companies are generally those focused on food-led managed pubs especially in London and the South East” he said in a note.

“Food accounts for a growing proportion of the revenues of the major pub companies. 

“Young’s (LON:YNGA) is (almost) a pure play on London while Greene King’s strong presence in London and the South East should increase with the acquisition of Spirit Pub.”

Mitchells & Butlers he reckons is also well represented in the South East.


Glass half full for Marston's and Mitchells & Butlers JP Morgan reckons

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