A property stock finding lots of value in central Europe
Wine retailer Majestic Wine has developed a strong reputation in recent years, largely on account of its canny knack of consistently surpassing market expectations. So it came as no surprise that interim figures to September were sparkling. Pre-tax profits fizzed up 42% to £3.96m (excluding a £400,000 exceptional gain arising from the sale and leaseback of a site in Putney), sales advanced to £69.14m from £56.75m and net debts fell from £6.15m to £88,000. Exuberant chief executive Tim How attributes his firm's outperformance of the wine market to its warehouse-style retailing format, venturing that 'we have a proposition which is clearly quite different to what other people have to offer'. For all its success on both sides of the Channel - the company owns sites in Calais, Coquelles and Cherbourg - Majestic still holds just 3% of the UK wine market and thus plenty of scope for further growth remains. Now operating from 113 sites and opening around eight more each year the company has someway to go before it hits its target of 175 warehouses. Broker Altium now expects a £10.3m profit for the full year, rising to £11.5m in 2004/05, anticipated earnings of 44.2p placing the shares on a fairly weighty forward p/e 18.9. Depending on the level at which you bought in, it is worth considering top-slicing your investment. But with a company of this quality, you should retain significant exposure.
Market cap: £127.4m
PE Forecast: 18.9
Share price: 830p
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