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RT003, I think you've been misquoted...
Quoting myself and that 500p target will go today
This will do well but before continue going up it will go down and there more reasons for it than not.
Recession, income, unclear future, higher loans, cost of matrials and list goes on... so don't be fooled by these dummy rises will not last.
If you are A long termer you will make money if you are deciplined to hold and keep holding beyond 2024. Otherwise you are playing with fire here.
GLA
IMHO
DYOR
Link below to an interesting analysis of the main UK house builders from Dr David Paul @ VectorVest.
https://www.youtube.com/watch?v=xKaXuthR75k
Persimmon have put out their report this morning which is on balance more optimistic than Barratt, with fewer sales being a short term issue with the longer term still bright. The market liked what Persimmon said and is currently up 9%. Barratt has clearly benefited from the rise at Persimmon.
What has happen in the last 24 hours
Was to be expected and will probably be reflected across the board for the house builders for H1 2023. As we move through the next half year I think we'll see a continuing improvement/acceptance of the new mortgage conditions, easing cost of living effects and possibly government incentives for first time buyers. GLA, keep the long-term view
Really down about 30% on last year so grim news- lower volumes and lower values . Pleased the company has a big cash pile.
Indeed it was and with a fair wind I expect this back above 500p by April
It's a bargain basement play. 70 million people in Britain. Most want to buy their own home. Whatever it costs.
......and delighted with an average of 406.25
I simply dont buy into this housing slow down and have also bought heavily in Taylor Wimpey and Persimmion
The facts that dividends are in play is an utter bonus
People so easily forget that hardly anyone buys a house at this time of year - ask any estate agent. Once Christmas is over and done with folk start looking for the next house again, will be doing the same meself.
They are pretty committed on the buy back, it’s easier to reduce or stop the dividend same as Wimpy did. What’s worrying me is the Directors Sales are way bigger than any buys, so something isn’t smelling so good right now. Maybe it’s the slowdown which the insiders see weekly, we only see it after in updates.
Yes, of course, which is great as long as trading continues to be strong. And maybe trading is fine and TheBigMan21's comment isn't reflective of the company as a whole.
But if trading collapses then the company will need to hold onto cash, which means they should stop the buyback. In 2008 all the UK house builders were happily buying back stock and then the market collapsed and they had to issue equity to survive, effectively buying high and selling low. The last thing we want is for that to happen again.
The buybacks will make the. EPS. and. div look better. because there are s. smaller number. of. shares between. which they have. to. divide. it.
Surprised they're still doing the buyback if trading is that bad.
Things are not looking so good for some Barratt regions. One office I know very well in the south west has only managed 16 sales in 5 weeks. This time last year that figure were 60 plus sales. A lot of regions are forward sold but come March / April things are going down hill. Caps have been put on land purchases to protect cash in the bank and talk of redundancies to office staff but this isn’t until early next year
Haven't been on here for a while ( concentrating on new film script and book. Tough at the top). But, to reiterate: Barratt has always been pro-active in growing its pool of home-grown apprentices. As the old guys retire, young, well-trained-up dudes will step into their shoes. Tradesmen from EU countries can still come here, and earn good dosh. Their motivation for coming to the UK has always been the top money; not sentiment. The Pole are/were bril workers. Collectively, they sent a fortune back to their country (+ UK family allowance) and , in doing so, raised the Polish economy. Last two years I bought these shares as they went down from around £8. The fundamentals of this company are solid. And I've got my sell price set at... £8. May take a little while, I know - but better than money in the bank, in my opinion. And what about that last divi, eh? GLA.
No need for apologies strictly, I'm not a frequent visitor to these pages. Thanks very much for the reply.
The only part we disagree on is wrt the Polish plumbers, the Bulgarian brickies and the Czech chippies. It wasn't the builders who sent them home, that was the great British public when they voted for Brexit. The builders were desperate to hold on to them, but people tend not to stay in a country where they don't feel welcome.
Krusty,
Sorry for the tardy reply ~ I’ve only just come onto LSE BDEV chat and seen your comment…
Referring back to the numbers in my previous comment here, the big contrast in the differing fortunes of Bellway on the one part and Barratt on the other (and for Taylor Wimps it was even worse than for Barratt) due to the credit crunch is largely down to the big contrast in the relative amounts of balance sheet leverage of the different companies…
So that’s now been sorted in respect of all the above ~ none have excessive borrowings compared to last time ~ so one hopes that the lesson about not getting ahead of themselves financially has been learned..?
But another element to this ~ one which I have reflected upon ever since the credit crunch, but which I never seem to see discussed elsewhere other than in our crew’s investing blog is this:
Just imagine if we’d had a government at the time of the credit crunch that had had a bit of wisdom & foresight ~ sufficient to say to the house building industry “Don’t slow down the sausage machine, don’t send home the Polish plumbers, the Bulgarian brickies and the Czech chippies ~ we’ll guarantee to take your surplus production off your hands for social housing at cost plus x until the economy & the market turns around”.
If they’d done that, which would also have meant that the brick kilns wouldn’t have had to shut down (as you can’t just switch those on and off like a kettle), the industry could surely have just kept chuntering on with building at full steam ahead instead of more or less halving in the interests of survival and which has caused damage to production capacity that seems still not fully resolved..?
Whereas, by sharp contrast, look at the money thrown at the banking sector at the time ~ considering that, as Basil Fawlty might have put it, “Well, they started it..!”
So, if it does start looking like push is coming to shove next year for house builders’ travails, maybe, just maybe, there’s a lesson from the credit crunch in there for the government to learn too…?
Because it’s not just the nasty house builders that are harmed by this (by “nasty”, I mean that the companies we’re invested in seem to have something of a poor rep with the public at large).
Mind you, I’m definitely not holding my breath on that one…!
Strictly
Arso you can't Strictly, never mind I'm sure most of us get the gist. Love the reference to Dick Emery - oohh you are awful!
Thanks for the numbers, no doubt you'll have seen my exchanges with hics below re the similarities or otherwise to 2008. To be fair, there are some pretty scary monsters to negotiate in housebuilding waters next year and, as much as I could argue that BDEV, TW. and PSN (my personal holdings) are much better positioned now than they were then (particularly wrt debt levels) I don't know if that will be enough to help them survive, let alone continue to pay dividends at current levels.
As we don't know when or at what level inflation might peak, how long it will remain above the 2% target, when interest rates might start to fall, the economy recover, war conclude, national/individual debt levels reduce, a Prime Minister & Chancellor survive longer than a school term etc. etc. etc. there's no way we can realistically forecast when things might look a little brighter for potential house-buyers and therefore housebuilders. Since we've already seen a significant recovery from recent lows, though, the market at least is betting that things will improve at some point in the future. So I'm holding for now.
Thanks again, always helpful to get your insights.
K
PS
It seems the moderating filter here means that I'm not allowed to name the north London rivals of the Spuds...?
Or their past manager's first name....?
Strictly
Krusty et al,
As I suspect there might just be a teensy element of wind-up going on here (well, lejjb certainly seems to have provoked some responses, at any rate…), I thought it might be useful to apply a bit of salve by way of a few numbers…?
To draw two different comparisons ~ Barratt against Bellway both back in the day, and Barratt back in the day against Barratt now ~ might be mollifying…?
In the housing slump of 1990 to 1991, Barratt’s book value per share dropped from 150p to 95p, whereas Bellway’s increased from 100p to 102p.
No cigar for Barratt, then…?
The team running Barratt back then was replaced/retired (I don’t have the details on that?), and the house-building equivalent of ****ne Wenger arriving at ****nal was brought in, and the new boys took Barratt’s book value per share up to 646p by 2006.
They then retired (as did Wenger) and Barratt brought in the house-builder equivalent of Unai Emery…
This was Mark Clare, who blundered in where angels feared to tread, and bought rival house builder Wilson Bowden using huge borrowings in 2006 (the financial equivalent of hiring a rowing boat just upstream of Niagara), leaving Barratt with balance sheet liabilities of 162% of tangible equity by 2007.
So, they duly went over the metaphorical falls and the upshot was that a combination of leverage, landbank write-downs and an ensuing serious rights issue took BVPS down from 646p in 2006 to 188p in 2011.
Existential doesn’t really describe it, does it..?
Like Unai Emery (or Dick to his friends at ****nal), Mark also left in a changing of the guard at Barratt.
And now, as of the 2022 accounts, Barratt’s BVPS is up to 447p, and liabilities are just 56% of tangible net balance sheet ~ which is less than a third of the percentage from previously and is now fully in keeping with that of the sector ~ which, having been burned by lack of government support through the credit crunch, are now, on the whole, playing it much safer….
So, lejjb may be right ~ though the numbers don’t imply that he is ~ or alternatively he may just be having a chuckle at the expense of some here..?
But, speaking personally, while I do not currently hold any Barratt shares, I remain fully invested in the house-building sector (financially painful though that may have been so far this year…!)
Strictly
lejjb I suggest you take your informal and unproven drivel elsewhere, cliff-edge lol.
lejjb, thanks for the in-depth analysis. Couple of questions from me so I can be clear about your thoughts on this:
How could BDEV buy back their own shares with excess cash if they were in debt?
If the company needed cash to buy more land, surely they would pause the share buyback?