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We are hopefully not tempting providence by taking a fresh look at Fuller Smith & Turner ahead of the pub and hotel group’s full-year results on Thursday, but May’s announcement of the sale of 37 tenanted pubs cannot go unmentioned, as it supports the initial investment thesis for the stock.
Admittedly, a 6pc capital gain over the past three-and-a-half years is hardly cause to crack open the champagne (even if 32.6p a share in dividends boosts the total return), but we remain convinced there is value to be had here.
The first-half results stated the company’s net assets came to £443m, but that remains a highly conservative assessment based, in some cases, on a study conducted in 1999. The directors’ valuation of 2022 flagged a figure of £995m and the price obtained for one-fifth of the tenanted estate last month suggests even this could be conservative.
Fuller Smith & Turner’s shares therefore trade at a small discount to the stated net asset value and a big one to their potential worth of the estate. The question now is what can unlock that value.
Portfolio management is one option, and the sale of a hotel in London is due to go through shortly. A share buyback scheme is another, and management is running a programme right now, while further signs of improved trading after a difficult few years, dogged by the pandemic, higher input costs and working from home, would also help.
The pub estate is heavily weighted towards the City and the West End in London and improved footfall here could drive the sort of like-for-like sales growth capable of driving profits back to, and then above, pre-pandemic levels.
Questor says: hold
Ticker: FSTA
Share price at close: £7.04
Update: Standard Chartered
Fresh allegations from whistleblowers concerning sanctions-busting, money laundering and poor internal controls at Standard Chartered will be a source of concern, not to say frustration, for shareholders, even though the bank’s management team dismisses them as baseless.
The share price could remain subdued as any potential legal process plays out, but we shall sit tight for now pending further developments as comfort can be drawn on three fronts.
First, Standard Chartered has paid out far less on conduct fines and regulatory penalties than the other four FTSE 100 banks. While Standard Chartered’s tally since 2011 of £1.5bn is nothing of which the bank will be proud, it pales next to the £73bn total paid out to regulators by HSBC, Barclays, Lloyds and NatWest.
Second, the bank is well capitalised, on the basis of regulatory ratios and requirements and is therefore able to withstand any further financial penalties, should that indeed be the end result (which is currently far from certain).