Investors push leading index back towards all time high as UK avoids deflationA revival in the mining sector helped push the FTSE 100 close to its record high again but with investors still facing a number of uncertainties, it ended up falling short.On the positive side, the UK avoided falling into deflation with the latest CPI figures showing zero for the second month in a row. But with the election campaign now well underway, the impact was limited.Recent legislative changes that introduce a free-of-tie option for licensees change the commercial basis of the tenanted and leased pub market. Our analysis suggests that Enterprise should be able to offset any negative profit pressures, and that [its] evolving strategic responses will lead to eventual profit upgrades. We think that the potential changes should convert Enterprise into a more proactive, commercially minded property manager that could also encompass a partially owned REIT and a managed pub division alongside the traditional tenanted estate. We have tweaked up our price target by 5% to 215p, and remain confident that the share price should double from here.The British supermarkets fell asleep at the wheel and crashed into the wall at great speed, resulting in considerable collateral damage for shareholders. Earnings and returns collapsed, assets written down and debt mushroomed. Management and strategies have had to change.There are still challenges facing the major British supermarkets; the discounters, deflation, rebalancing to mention just three. However, we feel that heavy lifting has been undertaken and that better strategies are being applied by superior management. With favourable comparatives in tow, a rising population and economic growth could drive sustained improvement in sales densities and cash generation, progress that could have a ‘Bookeresque’ feel in time. Indeed, returns may even rise with asset values bolstered. Continue reading...
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