BULL POINTS:
â– Clear plan to reduce short-term debt
â– Less likely to breach securitisation terms than some rivals
â– Respected hands on management
â– Well invested pubs
BEAR POINTS:
â– Dire trading outlook
â– High level of debt
It’s by no means a certainty, but there is a decent chance the stock market could stage a recovery in 2009 should signs emerge of a floor to the world’s economic travails. In such a happy event, the shares which are likely to rally the most are companies’ that currently look among the most distressed yet should be able to trade through a downturn. From that perspective, it can arguably be regarded as a plus point that All Bar One to Harvester pubs group Mitchells & Butlers, our high-risk tip of the year, recently appeared on the critical list of our recent Company Watch corporate health check feature. The problem with Mitchells, which it shares with several other big pub companies, is that its debt looks far too high given the deterioration in trading conditions that the pub industry is facing. Pub beer sales, for example, are falling at an annual rate of 8.1 per cent.