Broker snap: Greene King an opportunistic buy

9th Jun 2009 11:43

Since raising £207.5m through a rights issue in late April brewer and pub chain owner Greene King has wasted little time in spending a large chunk of it to good effect, and this has not been reflected in the share price, reckons broker KBC Peel Hunt.The company announced today it has acquired 11 high quality managed pubs from Punch Taverns for £30.4m in a deal which broker Panmure Gordon estimates will boost earnings per share by around 1.5%, while KBC Peel Hunt puts the expected 2010 earnings improvement slightly lower at 1%.KBC Peel Hunt says there is no shortage of cheap pubs and expects Greene King to carry on buying, while it will also continue to buy back discounted bonds 'on an opportunistic basis.''Since announcing the rights on 23 April, Greene King has spent £22m buying back bonds at a 49% discount, and this £30m [on the Punch Taverns pubs], meaning that it has already spent half the money. That we believe represents good progress,' said KBC analyst Paul Hickman. KBC has a 'hold' rating for Greene King, but with a 470p target price it believes there is a buying opportunity with the shares currently languishing at around 420p.