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Londoner7 you have good insight. Thanks a lot for your comments.
As local authorities can't afford to build affordable housing there is a reliance on the private sector to provide a proportion of new build. Vistry is building on behalf of housing associations, grant -aided by Homes England, who then rent out or use the shared ownership model which can qualify as affordable. It's an interesting model whch seems to be working.
A recent report by Savills illustrates the growth in the Build to Rent market in 2023, “BtR Houses, otherwise known as Single Family Housing, saw £1.9 billion worth of investment, up significantly from £360 million in 2022. This represented 42% of total BtR investment, shattering the previous record of 8% in 2022.”
This statistic represents a significant movement to new development, rather than acquiring existing housing stock for the rental market.
The latest ONS construction report for Jan 2024 shows, latest 3 months on year earlier, public new housing up 5% versus private new housing down -20%. (Currently, public only represents 15% of all new housing)
Perhaps the Vistry CEO is correct in saying the time is right for the partnerships model.
I’ve been following Vistry’s progress towards the partnership model for a few years. I was invested in Galiford when Vistry (formally Bovis) acquired their partnership subsidiary. While I’ve been attracted to the partnership model as key to getting more homes built, addressing the societal need, from an investment perspective I’ve struggled to understand the barriers to the traditional builders moving to the model and negating any Vistry advantage.
I watched the recent results presentation by Persimmon.
I was surprised to see that partnerships accounted for 23% of Persimmon’s sales in 2023, up from 18% in 2022, but partnership volumes were still down 17%. The CEO acknowledged the need and likely trend towards an increase in the supply of affordable housing, particularly if Labour wins the next election. But I interpreted his comment as favouring the status quo with the return of a coalition if not Conservative government. Perhaps I over interpret the comments, but it encouraged me to believe that Vistry will get a clear head start in the partnerships sector, and that creates a moat over the traditional builders, albeit for a few years.
I see this as important because I expect the future housing market to be quite different from the market that has operated for the last 30 plus years. I think a potential reversal is illustrated in the house price to earnings ratio, which peaked in 1989 (5x), 2007 (6.3x) and most recently in 2020 (7.0x). Each push higher has its own stimulus and, in my view, the latest was due to:
Planning restrictions, supported by the emergence of the Nimby, which favoured the large builders over the small and medium builders which struggled after the 2008 financial crisis.
Low interest rates, which made higher house prices affordable to buyers.
A diminished desire for flats, following the cladding and lease issues, and Covid lockdown.
(and I’ll add, with lower conviction) A more constrained construction labour force following Brexit.
Today, because of the cost of housing, the marginal first time buyer remains in the private rental sector, and the marginal private sector renter has fallen back to local authorities for social housing. Key is that local authorities have a statutory requirement to support the lower tier, and it then becomes a government problem, which can no longer be ignored.
Assuming Labour form the next government, I’m doubtful it will achieve a substantial increase in the number of houses built, particularly given a continuing constraint on construction labour, but I’ve no doubt that tax funds will be directed towards the affordable housing market. The current CMA investigation should provide evidence of the impact of planning restrictions and Labour might implement a policy solution, which I doubt strengthens the hand of the dominant large private house builders over the affordable market or the small and medium sized builders.
Ghgo; think you've rather nailed the reason!
Dividends or buy backs both have their benefits but I suppose Buy backs make the Earnings per share look better and if the Directors bonus is linked to the increasing share price then.....
What is it with this current vogue to do buybacks instead of dividends. Another buyback in lieu of the dividend.
Show me the money. The dividend money
Vistry Group posted impressive FY23 finals this morning confirming that the Group has established itself as the country’s leading Partnerships business. The resilience of the Group's unique Partnerships model was clearly demonstrated delivering a total of 16,118 new homes in 2023, down only 5.4% on the proforma prior year and highlighting the outperformance of VTY relative to the other UK homebuilders. Revenue was up 29.8% to £4,042.1m on an adjusted basis or up 28.6% to £3,564.2m on a reported basis. Reported PBT was up 23.2% to £304.8m while basic EPS dipped 25.3% to 64.6p. The outlook provided for FY24 was also solid with the Group on track to deliver strong growth in completions in 2024, targeting in excess of 17,500 units. This solid expansion is underpinned by a forward sales position totalling £4.6bn, of which £2.1bn is for delivery this year. Valuation is decent with forward PE ratio at 12.4x average for the sector. The balance sheet is solid with net debt at just £88.8m and the share price has positive momentum. BUY....
...from WealthOracle
wealthoracle.co.uk/detailed-result-full/VTY/831
I've been in touch with Adam Patinkin (he gives his emal address at the end of the video and I thought it would be rude not to :-)) - He's a thoroughly nice chap who most definitely knows his onions.
👍My favourite British housebuilder 100 % Paul's video hit the nail on the head and Greg's solid 42 years of experience is very sound indeed onward and upwards
I'm only in this because of you Svend (and because of a video Paul posted which explained Vistry's cunning plan to dominate the affordable housing market :-)) - A very nice rise! Onwards and upwards.....
Nice capital appreciation heading into the mid-teens following another £100 million BB commencing in April
I wasn't expecting the s/p to be up over 6% - but I'm not complaining!
Thanks Svend.
Hopefully, we shall see an update & confirmation they remain on schedule to return £1B to shareholders within 3 years i.e. by 2026.
I contacted someone with far more knowledge on Vistry than myself and they said the following:
" I do not expect any fireworks. Hoping to see FY24 guidance of at least $420M pre-tax profit (i.e., at least $500M Operating Profit) and an announcement of the next tranche of the share buyback program, along with some positive commentary regarding market conditions."
Anyone got anything to add to this?
Loved the video SimonPH - Gave me a much better insight into what they do and how they do it - much appreciated.
Thanks SimonPH
An hour and a half....wish me luck...I'm going in.
Check this out: https://www.youtube.com/watch?v=_W60Cmy3tbU
Hi All,
I must confess I know very little about Vistry - I saw a recommendation for them some time back from someone I follow and respect and have kept an eye on tthem over the last few months to see what they're up to and see if they are indeed "all that"... I've now taken the plunge and taken a small position in them (having watched them steadily rise over the last few months) - I notice the chat board is somewhat barren - Is anyone out there with some knowledge willing to throw in their 2p worth on Vistry? I notice final results are a couple of weeks away - Are the results expected to be decent? TIA.
Well, Greg Fitzgerald is now chairman (NED) and CEO! A clear conflict of interest!
Independant Directors should over sight any wrongdoings at Board level but in my experience, and since they generally represent major investment companies, they turn a blind eye in the interests of the share price. Despicable and unprincipled.
It's Interesting Greg Fitzgerald has been allowed to get away with this- surely he is bound by Insider trading rules and thus should not be allowed to deal in the companies shares during a closed period whilst full year results are yet to be released.
Vistry CEO's Share Sale: Potential Explanations and Questions
The news of Vistry CEO's sudden and substantial share sale, particularly given his close association with Baker Estates Ltd and Fitzgerald, is indeed noteworthy and warrants further investigation. While the specific reasons behind the move remain unclear, here are some potential explanations and questions to consider:
Possible Explanations:
Profit-taking: After a strong period of share price growth, the CEO might be taking advantage of high valuations to cash in on a portion of his holdings. This could be for personal financial reasons, such as diversifying his investment portfolio or meeting upcoming liquidity needs.
Portfolio rebalancing: The CEO might be adjusting his overall investment strategy and reducing his exposure to the housing market, potentially due to concerns about future market conditions or a desire to diversify into other sectors.
Tax planning: The sale could be part of a tax-planning strategy, such as capital gains harvesting or mitigating future tax liabilities.
Internal restructuring: There could be internal changes within Vistry or Baker Estates Ltd that are prompting the CEO to reduce his stake. This could involve mergers, acquisitions, or changes in ownership structure.
Personal reasons: The CEO might have personal reasons unrelated to the company, such as family circumstances or health issues, that necessitate selling some of his shares.
Questions for Further Investigation:
Specific details of the sale: Was the sale through a block trade or open market transaction? Are there any details about the buyer or the price per share?
CEO's past statements: Has the CEO previously made any public statements about his long-term commitment to Vistry or his shareholding intentions?
Company performance: How has Vistry been performing recently? Are there any concerns about the company's future prospects?
Market conditions: Is there anything noteworthy about the current state of the housing market or the broader stock market that might be influencing the decision?
Company statement: Has Vistry issued any official statement regarding the CEO's share sale? If not, is there any plan to do so?
Additional Points:
The size and sudden nature of the sale, coupled with the CEO's position, naturally raise questions and warrant further investigation.
Without more information, it is difficult to assess the true motivations behind the sale and its potential impact on Vistry or the housing market.
Investors should carefully consider the available information and conduct their due diligence before making any investment decisions.
It's important to note that these are just potential explanations and questions based on the limited information available. To gain a clearer understanding of the situation, it's crucial to seek out further details and official statements from Vistry and the CEO.
I hope this information provides a helpful starting point for our investi
CEO Greg Fitzgerald Sold 893,348 shares 8.573M
Baker Estates Ltd which Fitzgerald is closely associated.
From the armchair trader this morning:
Vistry Group [LON:VTY] has this morning published a full year trading update which is eye-catching amongst the sector owing to the very modest 5% reduction in completions that has been reported.
That’s ahead of guidance and as a result, adjusted pre-tax profits are expected to be in line with FY22’s numbers.
Management are lauding the company’s unique partnership model as being the winning formula here and forward sales are up 12.4% on the position of a year ago.