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Will the sp rise today?
Answer almost certainly - best RNS from any house builder this year!
Interesting take on the company, David Capital Partner's Adam Patinkin thesis on Vistry: https://www.youtube.com/watch?v=_W60Cmy3tbU&ab_channel=YetAnotherValuePodcast
TMS > I 2nd that 100% of the numbers are fact and add that Greg Fitzgerald also personally added to his holdings regularly while still within his exceptional 40 years of experience/faith in the industry/business my prediction is this should/could hit the high teens within 3-5 years and Vistry become part of the nett profit 1B club members by that time.
Here is why Vistry could achieve a net profit of over £1 billion in the next 3-5 years. The company has a strong track record of growth, and the UK housing market is expected to remain buoyant in the coming years. In addition, Vistry has several strategic initiatives in place that are designed to boost its profitability.
Yes, you heard it here first TMS/SB, Here are some reasons/factors that support Vistry's potential to reach £1 billion in net profit:
Strong track record of growth: Vistry has a long history of strong financial performance. The company's adjusted operating profit has grown at a compound annual growth rate (CAGR) of 10% over the past five years.
Buoyant housing market: The UK housing market is expected to remain strong in the coming years, with demand for new homes outstripping supply. This is likely to support Vistry's sales and profitability.
Strategic initiatives: Vistry is implementing several strategic initiatives that are designed to boost its profitability. These initiatives include:
Focus on high-margin partnerships: Vistry is focusing on partnerships with institutional investors, which tend to offer higher margins than private sales.
Investment in land acquisition: Vistry is investing in land acquisition to ensure it has a pipeline of projects that will support its growth plans.
Improved operational efficiency: Vistry is focused on improving its operational efficiency to reduce costs and increase margins.
Overall, several positive factors suggest that Vistry could achieve a net profit of over £1 billion in the next 3-5 years. The company has a strong track record of growth, the UK housing market is expected to remain buoyant, and Vistry has several strategic initiatives in place that are designed to boost its profitability. AGW IMOO DYOR GLA
Strictlybricks - ‘However, you have not said how exactly you come to your numbers…?’
My numbers have come from the company reports and I can find the figures on the various research tools available to me. Earnings per share is not net profit or the bottom line. Net profit is net profit. Lol. Figures taken from Stockopedia…….
2020
Revenue = £1.81bn
Net profit = £76.8m
2021
Revenue = £2.4bn
Net Profit = £254m
2022
Revenue = £2.7bn
Net Profit = £204m
2023 (estimate)
Revenue = £4.02bn
Net profit = £302m
A nice upward trend that the company are predicting will
Continue given their very bullish statements. Given Greg Fitzgerald has delivered in every year I’ve been invested I’ve no reason to doubt him.
“I think the point I was trying to make is that looking at the revenue and profit doubling over the last 3-4 years…”
……………….
Well, Vistry have been on a spending spree over the past year or two so, yes, their revenue has more than doubled…
But I’m old fashioned enough to consider that it’s the bottom line that matters to shareholders, not the top line, as it’s easy enough to spend capital buying businesses but what really matters is whether or not that translates into pro rata real extra profits…
And staying with my preferred metric ~ that clearly you’re not a fan of ~ and working from the tangible net equity of the company each balance sheet divided by the number of shares declared to be in issue at each balance sheet date in order to arrive at the tangible book value per share at each accounts period, I end up with:
2020: BVPS 676p less b/f BVPS 840.7p + div paid 41p = reality check loss per share of (123.2p)
2021: BVPS 751.2p less b/f BVPS 676p + div paid 60p = reality check EPS of 135.2p
2022: BVPS 572.9p less b/f BVPS 751.2p + div paid 63p = reality check loss (115.3p)
Total overall loss per share 2020 to 2022 = (103.3p).
Using the same methodology for the previous three years, 2017 to 2019, gives reality check EPS figures of 75.7p, 98.7p & 108.7p respectively.
That’s a total EPS for the three years of 283.1p.
Mind you ~ I am known to be prone to senior moments, and it’s always possible there’s an error or two in my calculations…?!
However, if your view is that profit has doubled for the most recent three years compared to the previous three years, which is starkly different to my view & which is that profits have not only dived but they’ve disappeared down the plughole, we are clearly using somewhat different metrics by which to form our respective understandings…
However, you have not said how exactly you come to your numbers…?
I think the bottom line to this discussion ~ and thanks for engaging with me on this, by the way ~ is that it takes two different views to make a market in any share at any time, whether they be close together or far apart…
And I reckon our respective views fall into the latter category…
I suppose, at the end of the day, maybe we’ll remember this discussion in a few years’ time and, if we’re still both in the land of the living (I don’t make assumptions about that these days..!) maybe we can revisit this in due course when we’ve seen how things have shaped up in the rear view mirror in due course…?
And I have to own that I only really lobbed a small piece of ordnance into Vistry this morning because the house builder share chat on LSE seems to have become a bit dull of late and I was looking to liven it up a bit…! :-)
Strictly
Strictlybricks - At the end of the day you can use which ever metrics you want, I suppose…….if your metrics work for you and have worked for you over a long period of time then you should stick to your methods and good luck to you…..
If you only need invest in house builder shares then you’ll have a very good knowledge of the sector but I would imagine that will come with the downside of analysing the numbers with blinkers on……
Your chosen method of analysis is one metric in a few thousand possibilities in the observable universe……there are other ways to value a company….
I think the point I was trying to make is that looking at the revenue and profit doubling over the last 3-4 years, the commitment to returning £1bn to shareholders and the backing of a very competent CEO, Vistry is significantly under valued on a very basic P/E alone. It’s not surprising the market is making the same assumptions.
“Vistry is delivering for shareholders. That’s the bottom line.”
…………..
TMS,
You’re not the first here on LSE to be unimpressed with my “rear view mirror” approach to investing, and I don’t imagine you’ll be the last either..?
However, it has served me well over more than twenty years of investing just in house builder shares & has provided me with a more than adequate living over that time.
My absolute basic metric is the progress of the tangible book value of a single share, adjusted for dividends.
This is 100% rear view mirror stuff…
Taking a comparison of Bellway vs Vistry, starting in 1997, Bellway had tangible BVPS of 183p vs 185p for Vistry (then Bovis).
Pretty much the same, in other words…
Scroll forward to 2022, Bellway’s tangible BVPS is now 2,727p vs Vistry’s 573p.
Add total divs paid, Bellway 1,282p & Vistry 702p, and less starting BVPS in each case, and you have tangible BVPS gain for Bellway of 3,826p vs Vistry 1,090p…
This reflects the difference in long term average ROE… in Bellway’s case, this is 16.4% and for Vistry this is 10.2%.
Now, if you are saying that Vistry has entered some brave new world in terms of how they operate from here then, who knows, you may well be right…?
However, Telford Homes, in which I was an investor at the time, headed off down a similar road, implying that the world was their lobster with a capital-lite future ~ except it didn’t quite pan out like that in practice…
But if we’re looking at what Vistry have done for the past three years insofar as published year end accounts go, by my reckoning, and tracking tangible BVPS as above, they lost 103.3p tangible BVPS for the three years as a whole, while also paying out 164p in dividend.
The upshot of these combined was to take their tangible BVPS down from 840.2p to 572.9p.
Whatever their prospects may, or may not, be from here ~ and if you’re an intended long term holder of their shares then obviously you’re going to be optimistic about this ~ I consider myself to be rather wussy in these things and I really don’t have the cojones to be a Vistry investor.
Strictly
TheMoneyShark I fully agree and would just add that their decision to fully move into 'partnerships' seems to have been a good strategic move considering the current lack of housing and for a foreseeable timeline.
Thank you all
Strictlybricks - ‘At a PBV of 1.3, it is currently costing 130p for every 100p of Vistry’s book value bought whereas 100p of book value could be currently purchased for 63p if it were Crest Nicholson, i.e. at less than half the cost…’
Who cares? You seem to be engaging in a world of odd metrics that mean very little in the grand scheme of things. Investors care about cold, hard cash, not PVB against book value. Lol.
Revenue and profit have both doubled at Vistry since 2020 and they’re forecasting over £400m profit in this financial year…….plus the board are committed to returning £1bn cash to shareholders over the next three years either though share buy backs or dividends.
Greg Firzgersld CEO has put up £5m of his own cash over the last 18 months which tells you all you need to know.
The reason you have ‘raised eyebrows’ is because you’re desperately trying to find something to be negative about by looking at metrics that mean nothing in the grand scheme of things.
Vistry is delivering for shareholders. That’s the bottom line.
"Is share buy back good or bad? And how does it work?"
………………
Rad,
If this becomes a topic that gains some traction here, I would say that you would likely see a range of viewpoints expressed, following Clint Eastwood’s maxim…
But I guess it depends on whether you happen to think the share is fairly, over or underpriced…?
At a PBV of 1.3, it is currently costing 130p for every 100p of Vistry’s book value bought whereas 100p of book value could be currently purchased for 63p if it were Crest Nicholson, i.e. at less than half the cost…
And while Crest have form for being flaky with their prognostications and are currently far from best in show performance-wise ~ hence being cheap ~ they have still roughly doubled their tangible book value per share over the past ten years as compared to Vistry’s dismal 1% progress over the same period..
I guess that Vistry’s share price is up where it is because investing folk are buying into the story and the sale pitch ~ and are therefore focused on the foggy future rather than minding the murky past…?
Otherwise known as the triumph of hope over experience, I would say..?
I may well be wrong, but this seems to be a popcorn job for the medium term..?
Strictly
Radika it's the opposite of dilution i.e. the dividend size/slices of the cake get larger as there is a reduced number of shares in circulation following the buybacks.
Is share buy back good or bad? And how does it work?
Interesting to see that Vistry, by far the worst performer over the past decade of the big house builders that I track though none-the-less still enjoying a gravity-defying market valuation, are about to embark upon a share buyback adventure...
Let me quantify my above assertion on this.
Tangible BVPS at the end of 2012, 567p
Tangible BVPS at the end of 2022, 572p
So, over ten years, Vistry have made the princely progress of just 1%.
And yet, for this stellar performance, the market currently awards them a price to book of over 1.3, which even trumps Persimmon’s…
Furthermore, Vistry also have the weakest balance sheet of the lot by the metric I use, which is total liabilities as a percentage of net tangible balance sheet.
Vistry’s is the only one with a total liabilities percentage in treble figures ~ 142% as at June 2023 by my reckoning….
Vistry are way off my radar as a potential investing prospect ~ but they do still fascinate me as I watch Mr Market’s workings, and wonder..?
Which is why I keep tabs on them…
Strictly
Started to add back my main holding!
Markets are negative with the business model after Oct update!
I think there's 50% + upside over the next couple years.
DYOR
gla
Trojan - Thanks update/announcement on the deck for tomorrow am shall be interesting no doubt..
Banburyboy I do not know either but their business tactic seems sound I.E to always try to follow where the demand is and whether Residential markets make a comeback anytime soon is probably a guessing game like trying timing the peaks and troughs of the bank interest rate environments which then leads to inflation speculation etc. However that said I do like the BOD's boldness in taking firm action when it's most needed it proves their firm resilience and experience.
Yes Svend. I haven't picked up on whether this is a permanent change in direction.
So if and when private residential picks up will they return ? Can they return ? Will they mothball that element of the land bank or just sell it ? Anyone know ?
Banburyboy agree these guys seem like the Rolls Royce of the house-building complex let's hope the SP can shine the same way for the next 3 years.
Never a divined from Countryside Properties.
A Corporate Action Cash Settlement Stock payment of £180 was paid out on 28/11/22 same time as delisting .
First dividend paid out to me 2/6/23 .
The first since November 2022 merger , still down on Countryside Properties investment.
Monty888 that is target 1 hit already and now only 10p off target 2 it's all on the charts ;-)
15% rise today , could not see how I got them until I looked here .
At 920p now have to check if still at a loss.