Punch could sell 3,000 pubs by 2012

Punch Taverns could sell as many as 3,000 pubs by the end of 2012, a top City analyst has forecast.

Douglas Jack, of Numis Securities, says that he believes Punch will eventually sell between 25 and 35% of the entire tenanted estate to focus on better performing pubs.

Jack said: "In all the major pub groups, under-performance is heavily weighted to the bottom 20% of pubs. "We estimate that if Punch were to sell these pubs, average pub profitability would increase 18%, transforming its company's estate quality and like-for-like trading prospects in a sector that is benefiting from 4% annual supply reduction."

Jack has a price target of 160p for Punch shares. He added: "Our target price would put Punch shares on the same EV/EBITDA (9.0x 2010E) rating as the peer group, yet in comparison, we believe Punch offers greater upside from disposals, estate quality

improvement, bond debt retirement, turning around the managed pub estate and leveraging central purchasing."

Punch is due to make a trading statement in the last week of August.