REMINDER: Our user survey closes on Friday, please submit your responses here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
I have never said tw worth 300+ and all my predictions are based on a return to normality.
"But still believe tw worth 300 once Brexit, trade wars, interest rates and election sorted. Just a matter of time - don't know how long" 11.07.18
Ps
24 Departments in 4 Groups + tw Spain. 1 dept = 4% total
Hi WiganW
Traditional Per for builders was about 13 - now 8,7 assuming no increase in Eps. So when things return to normal Sp should become 177 * 13 / 8.7 = 264. Don't know when Brexit, Trade war... will be sorted but that is the value of the company. Massive overreaction by the market.
Personally, I don't think Brexit, Trade War... affect supply/demand for housing very much, and builders will continue to prosper (increasing Eps) until supply catches up with demand.
I have never said tw worth 300+ and all my predictions are based on a return to normality.
Don't know anything about 1 Dept (Central London) of 1 Group and suspect it is a very small %age of tw turnover,
BoL
Hi Nigel, I agree your “system” is not working, it keeps predicting SP north of £3 and if you are honest you would agree has been consistently wrong. As for supply / demand how does your view sit with Wimps Central London business. Do you know how many units currently available and what the average price per unit is, and how those units are selling. How do you reflect that in your model. Either way, my point is that the Market sets the SP.
Hi WiganW
I see no reason for sales to be flat, not until supply catches up with demand (10+ years?) and the difference is probably increasing, (or to put it another way, the top of the cycle is becoming further away!) Since builders are able to sell everything they can build, they can increase prices, resulting in increasing margins which again, for the big 3 have been steadily increasing for the last 10 years.
My system not working properly but from your numbers:
Date, Eps, Sp, Per
Jul-18, 20.2, 176, 8.7
Dec-17, 20.2, 206, 10.2
Dec-16, 18.1, 154, 8.5
Dec-15, 15.1, 197, 13.0
Dec-14, 11.6, 135, 11.6
Dec-13, 8.5, 110, 12.9
Dec-12, 7.3, 74, 10.1
Eps for Interims will be published end of month, assumed no increase (unlike every other year),
If Eps increases, Per becomes even less.
Say average Per is 13 and Per becomes 6.5p, this means tw worth 2* current price.
Not going to happen - round numbers to illustrate my point.
BoL
Well, last six years Wimps eps rounded: 7.3, 8.5, 11.6, 15.1, 18.1, 20.2. As you would expect given where we are in the recovery from the crash they have increased. However, the cycle is reaching the top and if sales are flat then eps will be down as build cost inflation is 3/4%. So flat sales revenue means fall in earnings. Need to sell more and squeeze more margin just to stand still, and that may be difficult if economy paralysed for a while if we fall out of EU. We will have to wait and see, but there is enough poor sentiment out there to constrain any real SP rise in the sort term. I make this point to balance the seemingly excessive hope that we have some entitlement to an ever increasing SP regardless of the economic conditions.
Hi WiganW
Agree that if Eps deceases Sp deceases and per remains the same.
I don't have numbers going back 10 years but I doubt Eps have decreased once in the last 10 years for any of the big 3 builders, (except tw provision for lease hold).
Nothing to indicate decrease in Eps, in fact bdev results showed an unexpected rise in Eps in last 6 months, which could also apply to tw and psn, so I remain optimistic.
BoL
Hi Nigel. You say that Builders SP can’t go any lower because Price / earnings ratio. It is just a ratio so if earnings fall then SP will fall whilst still maintaining same ratio as currently. If the Market slows significantly, and that may happen if we crash out of Europe, the SP could fall significantly. Just like it did in the financial crisis 10 years ago. Crashing out would have significant impact on buyer confidence. May not happen, but no one can forecast outcome at this stage. IMHO, major investors will be reticent about committing capital to UK businesses until the outcome is clearer. It’s hard to see what will drive the SP higher.
Hi WiganW
Don't think Builders Pers can go any lower, so Sp can't go any lower (disaster already built into Sp), but agree rest of market could be affected.
Bdev rise due to being better than expected (but by no means great). I expect tw (& psn) Interims at end of month, to be better (in terms of growth), but what the market makes of them is anyone's guess.
Imho eps growth > 5% excellent and tw on target for last RNS.
Psn, tw and bdev Sp now driven by Divis cos confidence in them is nil - despite cash!
If no Brexit (or sorted favourably) builders would be 50 to 100% higher than they are now simply based on Per's.
BoL
BDEV has just reported, and no surprises for the Market. Even reassured on Central London. Wimps still have to report, so Market likely just waiting to here what gives. Whilst overall business is probably assumed to be decent, specific numbers for SE and Cental London will be scrutinised. IMHO, macro environment may undermine any decent numbers and affect the outlook for all UK investment decisions, until you know what gets sorted on way or the other.
Tw and Bdev share prices seem to be going in opposite directions. Why ?