Spoons beat pubs but struggle against supermarkets
Macro & Overnight
China continues to announce measures to stimulate its economy and boost its flagging stock market. HK and Shanghai-listed equities rose again overnight.
US equities firmed again, to reach record highs as Trump’s landslide performance continued in the New Hampshire Republican primaries.
UK Company News
Wetherspoon updated that its like-for-like revenue grew by 15.2% in December compared to the industry average of +8.8%, having now outperformed for 16 consecutive months. It ended 2023 trading from 814 pubs (broadly unchanged). It said that although inflation is reducing, labour and energy costs are far higher than pre-pandemic and leave the pub industry at a disadvantage to the supermarkets.
Yellow Cake now has a $2bn market value, up from U$200m at IPO in 2018. However, it continues to believe the same supply-demand characteristics remain as relevant today as they did in 2018. The uranium market is still under stress, driven by limited supply due to geopolitical factors and project ramp-up delays, alongside rising demand as nuclear power gains market share worldwide due to the need to decarbonise our energy supply. The estimated NAV for YCA is now 840p.
Forterra’s FY23E trading update guides to adjusted EBITDA ‘slightly ahead’ of its expectations despite brick volumes falling by over a third during the year. Today, we have raised our adjusted PBT and EPS estimates for FY23E and introduced forecasts for FY24E, taking our cue from the cautious tone in the outlook statement, which cites uncertainties ahead of a general election. However, we suggest that Forterra’s large housebuilding customers could outperform this view. (See note).
Zoo Digital confirms that production companies are taking longer than expected to complete projects. This follows the resumption of new production after the industry-wide strikes ended in November 2023. The anticipated January ramp-up has yet to fully materialise, with entertainment projects expected to be completed in January and now moving into February and beyond. We have adjusted our estimates for FY24E to reflect the slight delay in workflow but maintain estimates for FY25E with a return to profitability. (See note).
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