Punching ahead - reiterate OW on PUBLN £30s

Research evidence excerpt

FICC Research

Credit Research

4 August 2026

PUNCH PUBS & Co (PUBLN)

Punching ahead - reiterate OW on

PUBLN £30s

Punch Pubs delivered a strong set of Q3 results. LTM EBITDA

(to 17 May) was £103.1mn and management's PF EBITDA

target of £111mn looks achievable. We calculate net leverage

at 6.6x (6.1x on PF EBITDA). Reiterate OW PUBLN £30s. The

results provide a positive read-through for Stonegate (OW

£29s/FRNs).

Punch Pubs & Co – Positioning for strong FY26 results: As guided on the Q2 conference call

(from 8 May), Punch Pubs's Q3 26 profitability improved further y/y, fuelled by healthy demand,

recent acquisitions, costs savings as well as recent pub conversions. The robust Q3 26 results (12

weeks ending 17 May 2026 and reported on 31 July) give us confidence ahead of the Q4 results,

with management guiding that Q4 trading to date (eight weeks to 12 July) has been strong, with

underlying EBITDA ahead of the same period in 2025. In addition, management shared 1 that the

World Cup delivered particularly positive trading, with a strong uplift in sales across the Punch

Pubs & Co's estate. LFL sales in its Pub Partnerships pubs increased by +59% y/y over the seven

England match days through to the semi-finals. We think this provides a very strong readthrough for Stonegate (especially the L&T and partnerships segments).

As such, LTM adjusted EBITDA (52 weeks to 17 May) improved sequentially to £103.1mn from

£101.7mn as of Q2 26, from £100.1mn as of Q1 26, and £98.4mn as of FY25, according to

management. Punch Pubs operates a drinks-led pub estate and therefore has lower exposure to

destination dining, with c.77% of pub revenue coming from drink; in addition, approximately

30% of Punch Pubs' EBITDA profit comes from rental income, predominantly on inflation-linked

five-year tenancy agreements. Unlike peers such as JD Wetherspoon (Not Covered), which

recently issued its fourth profit warning this year on 22 July, Punch Pubs does not have

exposure to the Managed segment. This leaves the company better positioned in the context of

recent market developments affecting that segment, particularly higher labour and energy

costs.…