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Strictly , great analysis and helpful but how do you take into account the concept of a new ceo kitchen sinking his first set of numbers , so as to look like a super hero later?
Rapper PS
A while back, I recall you tried to sign up for the blog, but unsuccessfully...
I've just sent you another invite in case you're still interested and would like another attempt.... I recommend enlisting the help of someone who is nearer to the age of 8 than 88....
There's a lot more on there about Crest, Bellway, et al, from Yours Truly (and others - some of whom also comment here) than I put on here - especially these days...
You might even want to participate in Strictly Wacky Races - that'll most likely help you to up your game...!!!
Good luck...
Strictly
Rapper,
"thank God I took your advice before the wheels came off and am deeply in your debt. I am now quite heavily in Bellway and have added to my cash position so i'm now less "crestfallen" than I would have been without your brains. My thanks again"
You're welcome - though I don't recall giving advice (I don't do that) but perhaps a few comments here and on the blog do the same job...?
One bit of advice I am happy to give, though, is, as far as punning jokes go - don't give up your day job! (though, if you're 88, I don't suppose you still have one of those..?)
Incidentally, your age coincides with my percentage of my investments that are in Bellway... so if they go pear-shaped too, we're both in trouble...!
Strictly
it aso prevented me from having amiserable 88th birthday last Sunday! I certainly don't get any brainier with old age
thank God I took your advice before the wheels came off and am deeply in your debt. I am now quite heavily in Bellway and have added to my cash position so i'm now less "crestfallen" than I would have been without your brains. My thanks again
Terrace et al,
Something else to consider with Crest is that not only have they given a warning about profits - and my ten minute consideration on that suggests around 31p EPS for 2019 and 34p EPS for 2020 - they've also given a warning about dividends...
Namely, that they're intending to keep on with the 33p a year - even though this takes out all the earnings as I see it for the next two years - no doubt in order to keep Sid & Doris Bonkers on board providing they don't look any deeper...?
The problem with this is that it means the ongoing BVPS is barely (pardon the pun) even wiping its own posterior for the next two years - so earnings growth from 2021 has to come from improving return on equity thereafter in a period in which, if house price growth has also slowed down, and continues to do so, one might normally anticipate house builder margins to slide as in previous cycles...
Okay, there has been opinion expressed here that property boom & bust is over, but "It's different this time" are reckoned to be the four most dangerous words in investing so it takes a better man than me to go along with that one, Gunga Din....
I had already lost confidence in Crest due to the H1 results, which implied that the 2018 balance sheet had painted an overly rosy picture.
I calculate return on equity and earnings using balance sheet movement rather than using the sometimes, IMO, mythical figures quoted in the accounts.... And that's before you get into the wonderful concept of "Adjusted EPS" that well paid FDs so love..!
Anyway, this originally gave me a return on equity for 2018 of 22%, however this in turn led to an ROE of just 9% for 2019 taking the scribblers' figure of 47p EPS for 2019 and now, with this update, down to 31p EPS leading to 4.0% ROE.
So, if I now also consign the previous balance sheet to the section marked fairy tales and just equalise the two years to 2019, I get 13% ROE.
And 10.5% for 2020. And that's on no underlying value growth due to lumping all the earnings out in dividend.
My concern is that Crest, for the time being at least, might become the new Vicky Pollard of house builder shares - stealing Galliford's crown in this respect, and I've now got them marked down with a precautionary minus 35% weighting which will hopefully be sufficient to keep me from being tempted by any further share price falls until such time as we can see what sort of shape the new big cheese there puts on it all..?
I'm interested to see if Mr Market starts to take this stuff into consideration over the coming days..?
Strictly
Well crst certainly spooked the homebuilders today,mind you the rest of the market is pretty miserable at the moment .A no majority outcome to the election could probably prolong this mood for a good while.A real problem these background conditions.
Terrace,
Rather than retype it all here, have a look on the blog at the comment I've just posted there...
Strictly
Strictly....any comments on the dismal update from Crest this morning?,
I suppose this is positive for our shares although much now priced in.
If Boris win a majority we will get his fairly hard but orderly Brexit. That is not the worst of the scenarios that were very possible only a month ago. Thus the rise in the sector.
If Boris falls 20 seats short of a majority we probably get anouther referendum with no Brexit at all the likely outcome. That would be very good for shares.
If in the unlikey case Labour wins a clear majority we get a second referendum and no brexit but we also get a bunch of economic policies that will probably drive our SP down.
because they are more vulnerable to political intervention?
Why are homebuilders SPs at a permanent discount to the wider market?,
Thanks
Hard to understand their portfolio but best non Uk builder stock I can find that meets my 3 objectives
Diversify out a bit of Uk builders
Get same divi as Uk builders
Have at least some sp growth trend
You have happened on a company which does indeed provide some good ballast to a portfolio .Agree with James Not invested but had a brief look at a few months back Now a timely reminder to do so again
Barry had something to say about the bonus culture
https://citywire.co.uk/investment-trust-insider/news/barry-olliff-the-city-s-bonus-culture-must-change-if-we-are-all-to-prosper/a1014551
I have been investing in CLIG for a number of years. As you say, it is a completely different type of investment to housebuilders. I hold it because it has an excellent track record over many years as a fund manager and it is a proxy for an exposure to emerging markets - and now increasingly developed markets as it diversifies its offerings. Note that the founder and major shareholder - Barry Olliff - retires at the end of this year.
https://www.citlon.com/investor-relations/investor-reports/CoL2019AR.pdf
This gives the same 6.5% dividend and part of the potential for growth as our UK housebuilding sector yet is completely different.
Can anybody say why this is not a good share to blend with investment in our builders for diversification purposes. I really don't know enough about this sector to invest more than 7% of my ISA. The rest is UK builders and so far this year the builders side has done quite well in a difficult unpredictable market.
Dear MPs......can we get on with our lives now or does the turmoil need to continue?
>Strictly....That is a very comforting post,lets hope Mr Market reads it.
Looks like it did.
What a day!
Just half an hour left and then I'll need a lie down. :)
Congrats Strictly
Hope you got a good price, it got down to 3200 at one point.
Nothing much wrong with FinRes as far as I could see. But the market is always right ? I think the variation in Sp shows the market hasn't got a clue what it is doing. Don't know how many Sp Sell triggers fired, it's how 1 falling pebble can turn into a landslide.
No doubt the price will settle over next few days, I expect at about Mondays price. I also thought about topping up, but not brave enough.
BoL
Terrace,
And since writing it, I've now just unloaded the rest of my Crest and am now roughly 80% Bellway 20% Redrow
Strictly
Strictly....That is a very comforting post,lets hope Mr Market reads it.
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In partnership with NHBC / An HBF Company
Strong momentum and progress at Inland
Inland Homes has issued a trading statement in respect of the 15 months ending September 30 showing a 313% rise in partnership housing equivalent units to 339 (June 30 2018: 82) and a 53% fall in private housing completions to 130 (June 30 2018: 275). Revenue stayed steady at £151 million.
The firm said: “Significant progress has been made in the period with strong momentum across the group’s operations and trading in the period has been in line with the directors’ expectations.”
Inland saw an expected fall in private housing completions to 130 (2018: 275) “due to the number of large-scale apartment developments under construction where occupations can only be achieved on handover of completed blocks. We currently have 889 private homes and 578 partnership housing equivalents under construction, which provides an indication of the current scale of our development programme. We have begun discussions with a number of build to rent operators and expect to enter into this market which will reduce our headline gearing and generate new capital to reinvest in our business.”
Inland’s average selling price was £250,000 with an average sales rate per active site over the past nine months of 0.71 homes per week. The current forward order book for private sale stands at £28.3 million.
Inland’s partnership housing equivalent units have increased by 313% as the firm has increased penetration into that marketplace. A recent partnership housing contract worth £5.4 million was secured for Watford Community Housing Trust for 45 homes. “We expect to secure further significant contracts during the new financial year,” said Inland.
The firm has secured planning consent on its “flagship” 100 acre Wilton Park site in Beaconsfield, Buckinghamshire and secured consent for a new urban village of 1,725 homes next to the station in Cheshunt, Hertfordshire.
Stephen Wicks, Inland group ceo, said: “We have maintained our significant growth trajectory whilst investing heavily in high quality staff and systems, at the same time as improving build quality and increasing satisfaction with both customers and partners. The business is performing well at all levels and we are laying the foundations for significant future growth. With the benefit of our new planning permissions and the momentum that has been achieved, we are now well set to increase the scale and breadth of the business.”
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could not see the reason for the Bellway dip. I suppose expectations rather than results. Might creep back up over the next few days.
Agree with all of your analysis strictly. The different builders offer different plusses and minuses. Only Tef for me had a compelling case to be 100% concentrated.
I have a large Bellway holding in spite of a low dividend due to an expectation they will do better than the others in a downturn. I have a lot of crest and some persimmon for the opposite reasons. High dividends now. Builders were all moving in lockstep up to todays drop for Bellway.
Since I came out of TEF I have bought the following and had the following rises (excluding dividends) in order of the size of my holding:
1) Crest, +11.2%
2) Bellway +9.6%
3) Redrow +7.5%
4) Persimmon+17.65%
5) INland +16.4%
6) City of London Investment Group -3.5%
7) Berkeley+13.0%
City of London is a pure contrarian play and should move independently to UK builders or even a UK recession. Divi of 6.5% and growth potential. P/E of 12 which is not a bad buy in point for a non builder with a big dividend. Very wide spread so need to plan to hold for a long time.
No one seems to have commented on Bellway's full year results here today, but I thought Bellway very much delivered a Ronseal job today...
I was happy with the results but, thus far, the market seems not to be.....
Quelle surprise..!
Bellway's BVPS ended up just 0.2 of a percent out from the figure I'd had penciled in for them.
Perhaps Mr Market didn't warm to the inference that there would likely be a drop in EPS for the current year due to the one-off nature of high margins being achieved on the Nine Elms site selling through last year - and ignoring that Bellway have also said they expect earnings growth to continue again after this year and for margins, currently sliding a tad, to steady out...?
Whatever, it seems to me that investors have short memories...
Back in the Credit Crunch s..t storm, Bellway were the ONLY house builder to keep on paying a dividend all the way through, they took hardly any write down on their land bank, unlike others, which, to me, implies that they were happy to expose more authentically the real margin make up they had to achieve in subsequent years after the crunch, and I have now got 37 years' uninterrupted track record for them on the important numbers and they seem so straight from start to finish it almost makes you want to kiss the management..!
And, are we perhaps heading into another investing s..tstorm..?
And I don't mean due to Brexit, I mean due to huge and increasing global financial imbalances (collective human short memory again) that surely have to go pear-shaped at some point?
If we are heading that way, it's worth bearing in mind that Bellway have now got their overall liabilities (as a percentage of net value) down to just 33%.
The next nearest is Battersea Dogs' Home, on 49%.
Redrow and Persimmon, by contrast, are both heading in the opposite direction and are both currently in the mid 60%s...
And Crest are over 90%, and increasing.
As Warren Buffett says, when it comes to investing, be bold when others are fearful, and be fearful when others are bold...
And it looks to me that Bellway, the long term purveyor of successful moderation, are becoming cautious.... they might currently be paying a small price for it in terms of return on equity with non-existent gearing on borrowings but, as Mark Claire of Barratt showed us when he borrowed big to buy Wilson Bowden, and also Tom Hunter when he did likewise with a leveraged buyout to purchase Crest, the big egos out there sometimes get it seriously wrong...
And then it's shareholders wot takes the hit...
And thirty seven years of prudent track record is good enough for me, and the upshot is that Bellway are now, by some degree, my largest holding.
Strictly