The City Pub Group snapping up bargains as lockdown ends

The City Pub Group owns and operates an estate of premium pubs across the southern half of England and Wales.

The group’s pub estate comprises 45 free houses located largely in London, Cathedral cities and market towns, each of which is focused on appealing specifically to its local market.

Its portfolio consists of predominantly freehold, managed pubs, offering a wide range of high-quality drinks and food tailored to each of its pubs’ customers.

City Pub Group PLC’s financial strength should enable it to generate underlying profits of GBP20mln by 2024, according to broker Peel Hunt.

That compares with GBP9mln in 2019 before the pandemic struck and ‘buy’ with a target price of 160p is its investment view.

The broker highlights that the pub chain was back in profit by the end of June in a first half that should have been loss-making due to the impact of the pandemic,

Sales were also running at 90% of 2019 levels at 42 out of 48 of its outlets, even though there were limits on the indoor capacity allowed for much of the recent period and especially during the Euro football championship.

City Pub Group PLC () has the potential to increase its operating margins by six percentage points, according to broker Peel Hunt, which initiated coverage of the stock with a ‘buy’ recommendation and 160p price target.

In a 29-page note entitled ‘buy, build and burgeon’, clients were told the chain has one of the sector’s strongest balance sheets, “with minimal debt”.

() said it is currently trading profitably and at 90% of 2019 levels.

The publican has reopened 42 out of 48 sites, located across Southern England and Wales, while four are under development and earmarked to open in spring 2022.

Newly-reopened pubs and bars in England are waiting to see whether the stimulus package to be announced by the Treasury this week will give some respite to subdued trading.

The anticipated ‘Super Saturday’ was relatively tame in most parts of the UK, with the surge in criminality and A&E admissions not coming in as high as expected.

City Pub Group PLC’s financial strength should enable it to generate underlying profits of GBP20mln by 2024, according to broker Peel Hunt.

That compares with GBP9mln in 2019 before the pandemic struck and ‘buy’ with a target price of 160p is its investment view.

The broker highlights that the pub chain was back in profit by the end of June in a first half that should have been loss-making due to the impact of the pandemic,

Clive Watson, executive chairman at The City Pub Group () says the group is raring to go as the time pubs are allowed to re-open in the UK again gets nearer.

Around 40 of its 47 pubs have what Watson describes as very good beer gardens and it is these type of outlets that are expected to be allowed to open first when restrictions are lifted.

Indications from the government are that this will be in July but it might be earlier and Watson says City Pub will start to bring staff out of furlough in two weeks to prepare and make sure it is ‘match-fit’.