City Pub Group's (CPC) focus remains on growth, even as 'wet-led' pubs proved more resilient in the face of recent industry challenges. Indeed, the group's ability to expand its estate to between 65 and 70 pubs by 2021 is being aided by other potential buyers pulling out of the market. With pubs trading in 44 locations, CPC is still some way short of the targetted range, although four sites under development will start trading this year, with another two in the purchase process. New locations will continue the strategic preference for freehold over leasehold, as chief executive Clive Watson said the former is good for shareholders, and the latter good for landlords. City Pubs Group's sites tend to be former pubs and underperforming businesses, so the buyer has the upper hand, as the group would rather outlay on capex than goodwill.
Management is in the process of refinancing its existing £30m credit facility, with the aim of increasing this to £45m with better terms. This refinancing, along with internally generated cash flows, is expected to be enough to fund the expansion plans. In October last year, CPC raised £6.2m via a share placing, but a further issue of equity is not expected in the near term.
Analysts at Liberum expect adjusted pre-tax profits of £6.7m during 2019 giving EPS of 8.6p, up from £5.1m and 6.9p in 2018.
| CITY PUB GROUP (CPC) | ||||
| ORD PRICE: | 233p | MARKET VALUE: | £138m | |
| TOUCH: | 230-236p | 12-MONTH HIGH: | 253p | LOW: 160p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 72 | |
| NET ASSET VALUE: | 132p | NET DEBT: | 11% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014* | 15.3 | -0.76 | na | na |
| 2015* | 20.2 | 0.86 | na | na |
| 2016 | 27.8 | 0.58 | 1.50 | 1.50 |
| 2017 | 37.4 | -0.26 | -2.45 | 2.25 |
| 2018 | 45.7 | 2.62 | 3.23 | 2.75 |
| % change | +22 | - | - | +22 |
| Ex-div: | 30 May | |||
| Payment: | 2 Jul | |||
| *Pre-IPO figures | ||||
