Restaurants pubs and bars are feeling the pinch, complaining about higher costs and cash-strapped customers. City Pub Group is different. Recommended by Midas in February at 167p, the shares are now 227½p, so they have soared more than 36 per cent in just seven months.
The firm is expanding fast, chief executive Clive Watson is ambitious and brokers believe the shares should continue to rise.
Watson has form. He founded Capital Pub Group in 2000, built the business up before, during and after the recession and sold it for £93 million in 2011. Capital was a chain of London pubs, each with their own distinctive, local feel. City Pub Group follows a similar premise.
Rather than homing in on food, as many rivals do, City focuses on drinks, the old-fashioned reason for going to the pub – with subtle modern touches, such as no and low-alcohol drinks, craft beers and specialist gins.
Watson and his team also benefit from decades of experience in the industry, acquiring pubs that have been neglected by previous owners, sprucing them up and giving them a new lease of life.
In February, the group had 34 pubs. Today, there are 41 pubs in towns and cities such as Norwich, Cambridge and Exeter, and several in London too.
The company is also benefiting from rivals' woes. Watson can snap up sites cheaply and five more are coming on-stream soon. First-half results are announced on Thursday and brokers expect strong figures, benefiting from good underlying growth, with a further boost from the World Cup and the hot weather.
For the full-year, sales are expected to increase 20 per cent to £49 million, with profits up more than 70 per cent to £5.5 million. A dividend of 2.5p has been pencilled in, against 2.3p in 2017.
Midas verdict: City Pub Group has come a long way fast but the best is yet to come. When the firm floated, it had 33 pubs and hoped to double in size by 2021.
Now the group is set to reach that target earlier. Brokers believe it can reach 100 pubs in the next few years, as customers respond to the renovated bars, trendy drinks and decent service.
Existing investors should hold, while new ones could also swallow a few shares.
Traded on: Aim Ticker: CPC Contact: citypubcompany.com 020 7559 5106