Barratt Developments Share Chat (BDEV)

Seemed to have retraced nearly 10%!!

Not sure what's spooked the market with BDEV more than other HB shares.

RNS is average imv but looking forward is optimistic so what will sp do? Likely stand still imv.

Ugly results because of yet more remediation.

Agree pal, fully sold up and out with £1700 profit was a lot more, divi cut not worth my risk now

Why own the shares. Dearest Angela will unfortunately push the share price down . Markets have not priced in her influence in affecting the builders bottom line. With the planning changes going forward and more affordable housing that will reduce the builders profits, her crackpot interference is not financially fully known at present, and can only be a negative.

Something to think about.

It's still a nice 5% dividend yield so as a long term investor I am happy to hold because when housebuilding does eventually pick up I'll have a nice low average price plus a growing again (hopefully) dividend.

A modest 5% dividend in no way compensates for the -40% BDEV share price plunge in the past 18 years, the -10% decline YTD, the worsening dividend tax environment, the worsening CGT tax environment, the worsening ISA tax environment, the worsening pension tax environment, and the Labour push to make housebuilders effectively construct small houses at a big loss.

Currently yielding just over 3% here.

I guess my post removed hit a nerve

Truth hurts the establishment

Politics is a short term game. Building houses is a long term one. Once the government realise that making the building market less profitable will most likely slow down house building they might u-turn. If not the BDev board may simply play along until the next lot come along. As Hank Rearden said, "they want us to pretend to see the world as they pretend to see it" - Investing in BDEV is now a very long game.

Skier1

"worsening ISA tax environment" - what changes to ISA tax rules are you talking about... ?

thanks for clarifying

The ISA allowance has remained static at £20k per year for some time, and fiscal drag is reducing its tax benefit by stealth. What's more, Oct 30th budget rumours swirl that the £20k allowance could be cut further, while the maximum ISA pot may be capped at just £100k per lifetime. This is discouraging (not encouraging) savings and investment.

RNS today is worth a few pence on the sp as medium term it puts the company at the centre of some large developments and in a favourable light withe the hopelessly over promoted no brainer Raynor.

How come I am seeing no RNS anywhere on my LSE Watchlist this morning, a techno glitch perhaps?

Barratt Developments - Launch of MADE Partnership #BDEV @Barrattplc https://www.voxmarkets.co.uk/rns/announcement/41123ca6-5310-4e0b-aeb4-073893938c08 #voxmarkets undefined

BD,

If you download VOX and create a watchlist you get a ‘ping’ whenever there are RNS’s from your watchlist! No need to miss one again, whatever the time of release

Not impressed with the RNS. It’s basically a partnership deal on a greater scale, these deals will offer a reduced margin for shareholders. Seems quite clear that big business, ie Lloyds want to control the narrative moving forward, which will mean reduced profits for the big house builders.

Why own the shares at the present valuation, once the numbers come out on the build costs the share price will surely retreat as margins will be reduced.

Something to think about.

It is a great opportunity for BDEV, a proactive investment that could be very beneficial in improving volumes in coming years, interesting times.

‘Could be very beneficial in improving volumes’. Er I don’t think so. Big business ie the government, Lloyds, Blackstone, Blackrock, and any other large player that enters the market will want a book value discount.

Seeing as this is a partnership deal, ie building council/social housing the margins are about 10% compared to say 20% for a historic privatelysold house. It appears as I said that the good old days of cheap mortgages/help to buy are now historic. What will the Labour government do to encourage housing my guess is more deals like this, they are not interested in the private market and the builders making large profits, that is quite clear.

If you think Reeves will want to support the builders in the next budget where they were making say 20% on a private dwelling you need to extract your head from the sand !

Something to think about.

Morning,

Morning Finley,

Seeing as this is a partnership deal, ie building council/social housing the margins are about 10% compared to say 20% for a historic privatelysold house.

Maybe they are taking a leaf out of the Vistry book? 1 year performance here 13%. Vistry 61%?

I agree. Too many "partners" with a stake, hence having to share the bottom line. i wonder if BDEV are chasing the large turnover at the expense of profit per unit. I got burned with Interserve trying to build too many projects with small margins.

All it takes is one large one to go belly up, and the company folds. BDEV are playing with the big money boys, who won't worry about throwing them under the bus when they have done the spadework (yes, pun on purpose!)

@Finley1 margins may well be tighter for social housing compared to private builds historically, but you seem to miss the point about volumes and relationship with margins.

This is a master developer partnership for larger projects that is likely to include a mix of social/private housing plus commercial/infrastructure builds. The various development projects will be built by various construction firms depending upon their expertise at variable sector margins. BDEV will be able to bid for whatever elements of a development it sees as suitable for its business.

“Seeing as this is a partnership deal, i.e. building council/social housing the margins are about 10% compared to say 20% for a historic privately sold house.”

…………………………….

Fin, I fear you may be right here…?

That’s “may be” as opposed to “are” because, like most folk here I suspect, I don’t have a crystal ball and I don’t happen to drink with that old b.stard Captain Hindsight.

But, as I’ve said on here before, I was solely invested in house builder shares for just over twenty years (hence the moniker) until early this year when I shifted nearly ninety percent of holdings into the insurance boys.

The Captain has shown me my market timing wasn’t great, but I can’t odds that.

What I can see ~ and I’m using Bellway here as it’s my benchmark share ~ is three years’ scribbler forecasts for a return on equity of an average of around 5%, compared to four times that & more a few years ago when the builders were in their pomp.

And, IMV, even at the current suppressed PBVs, house builders are overpriced based on the forecast ROEs if the scribblers are more or less right and if those low returns continue to endure…?

In other words, are we maybe, just maybe, looking at the end of the golden age of house builders in terms of full fat ROEs..?

I am certainly not calling it, and I hope I am proved to be overly concerned & therefore wrong…?

However, for myself, I HAVE effectively called “pause” on most of my builder holdings ~ probably at least until such time as we’ve got through the 2024 results which are forecast to be the nadir of this era going forwards, and then hopefully seeing adjusted forecast EPS rising strongly thereafter…?

In the interim, I guess I just have to hope that the market doesn’t continue to see it so differently to me…? ☹

Strictly

"Maybe they are taking a leaf out of the Vistry book? 1 year performance here 13%. Vistry 61%?"

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Crossley,

As you’ll no doubt be aware, I am NOT a fan of Vistry…

In its previous incarnation as Bovis (which reminds me of Hermes becoming Evri, trying to escape their inglorious past…. an odd name to choose, seeing as it seems to describe the number of parcels they apparently lose..?), Vistry was a serially poor performer of the house builders going right back to the nineties…

And, over the past decade, they have continued thus…

End of 2013, their BVPS was 604p.

Scroll forward ten years, their BVPS hasn’t really moved ~ well, it’s actually dropped slightly ~ at 600p.

For 2024, we have declared EPS at the half time whistle of 33.9p vs reality check EPS (using BVPS start & finish adjusted for dividends) by my calculation of 29.3p.

That makes for an ROE of 4.9%, so double that for the year makes 9.8% against the scribblers’ forecast 15% full year ROE.

So, on these numbers, one could surely argue that Bovis could have reasonably been renamed “Jam Tomorrow” rather than Vistry ~ I mean, they’re not even paying a dividend now..!

But I do take my hat off to Greg Fitzgerald ~ he’s successfully talked the game up to the point whereby Vistry’s PBV is over 2.2.

Based on the overall sector’s track record, this would have been heady stuff even in the good times, let alone now.

So, if there’s any sort of prize going for the triumph of salesmanship over experience, I award it to Greg.

In the meantime, being an investing wuss, I am watching, armed with popcorn, from the sidelines ~ though I maybe stand to be proved very wrong…?

Strictly

Hello Strictly,

It’s been quite a while since we’ve communicated. I’ve been away for a good couple of months while my mother recovers from a fall. In fact, it was the day after we upset a few on the LGen board! I do hope you are well yourself.

I’m not saying it’s right or wrong, the Vistry model. Certainly not for me. But, their SP performance certainly seems to be the envy of the sector, at the moment. I too have stepped away, mostly, from my HB position until things look more of a value play.