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1,985,000 buy this morning
Big buys this morning......someone is loading up.
These days the market appears completely disinterested in trying to establish fair value and has become so short term it is no wonder that many experienced investors have switched to trading a large chunk of their capital rather than buying and holding. Given that market makers are making so little money these days they appear obsessed with getting the next trade and prices are all over the place searching for stops and whatever volume they can get their hands on. Apart from the obvious risk of a cheap takeover there are countless decent small caps on the UK markets trading on modest multiples way below 5 and 10 year averages. Some will fail of course but most will survive and prosper and the brave will make a lot of money. I remain of the view that if our Chairman is happy to continue to buy with his own cash and he has more experience of how to value a company in his little finger than most of the market spivs have, that is a clear signal to me to join him.
Like Warren Buffet says. Ignore the market and know what you’re buying. You don’t need to worry about the share price then.
Like Warren Buffet says. Ignore the market and know what you’re buying. You don’t need to worry about the share price then
The market can be very stupid.
in March 2020, jet2 share price went from £20 to £1.2 (doesn't show this on google), I remember because I bought tons at £1.2.
It then rebounded to £12.
Was jet2 business model broken? nope, just short term issues.
Same here imo, investors just can't help panicking and following the herd.
Agreed and with 50% of the market cap of the business represented by cash and an unchanged PBIT for 2024 of £15-20m I cannot believe how cheap this business has become. If WJ ever gets back to near its 2021 performance of PBT of £51.1m it will seriously multi-bag from here. I have used this week's SP weakness as a good excuse to add to my position. As always DYOR.
Another Direct buy. Good size too.
I asked yesterday about any liabilities, such as lease liabilities, and no one gave me an answer? Why weren't these mentioned in the TU?
Watkin Jones (LON:WJG)
Share price: 33p (-5%)
Market cap: £85m
This homebuilder and developer provides a full-year trading update for FY September 2023.
The year just finished:
The company “was successful in achieving its operational objectives”, however there have been “certain additional costs, including acceleration costs to ensure successful completion on two schemes”.
The company now expects revenue of over £400m and underlying PBIT of “approximately breakeven”.
PBIT seems to be the same thing as adjusted EBIT, i.e. adjusted earnings before interest and taxes.
The RNS doesn’t give me all the information I need, but the latest note from Progressive Research helps a lot: they have reduced their pre-tax profit forecast by £3.5m, from breakeven to a £3.5m loss.
They also cut their revenue forecast by 7% to £419m. So it’s looking like a miss on revenues (on forecasts which had already been downgraded).
The current year:
There is no change to guidance for the current financial year, FY 2024.
The existing guidance (as set out in July) is that the company will generate PBIT of £15m to £20m in the current financial year.
The company already has secured revenue of £330m, but still has some work to do to get to the £400m total. I see that the StockReport shows an older £500m revenue estimate - estimates have fallen very significantly from that level.
Net cash is better than expected at £43m (prior estimate £20m).
Graham’s view
Paul has commented on this one much more frequently than I have (see the archives). The last time I looked at it was back in October 2022, at 100p per share, when I took a neutral stance, noting that the shares were trading at a high premium to NAV and worrying that the company’s strong earnings record might not be sustainable in a period of higher interest rates.
The most recent interim results showed net assets of £165m, or £153m excluding intangibles.
So whereas this stock previously traded at a big premium to NAV, it’s now at a significant discount.
Earnings have evaporated and the company is now likely to post a loss. So on a P/E basis, this is going to look expensive. Whereas when earnings were strong, it looked cheap!
But as we’ve previously observed, cyclical companies often look cheap when they are expensive, and then they look expensive when they are cheap.
Watkin Jones now satisfies the Ben Graham Deep Value checklist:
These shares are down by 67% year-to-date, and down by 83% over five years.
The net cash balance now covers half of the market cap.
So I’m going to turn positive on these shares. One for the bottom drawer, perhaps?
SOURCE - STOCKOPEDIA - PAUL SCOTT
Well for sure the market doesn’t like the update and the company is clearly struggling. Analysts seem optimistic on the company’s future and so am I but there always doubt in the market. People are clearly selling and running away. Clear question is has WJC got a bright future?
They were radio silent about anticipated profits which will be generated on the fixed revenue of £330m in FY 24 .Perhaps they don't expect much?
They have already flagged up they were hit by accecleration costs meeting practical completion deadlines this summer Same risks attach
What is certain is they need to get some more forward sales
Good time to top up under 100 million mcap.
That's fair. I guess when I look at companies I like to see management with reasonable skin in the game to help align interests. The CFO earned over £400k last year so owning shares worth 10-20% of her total pay isn't unreasonable in my view. But I understand your point.
Its very common now for directors not to own shares. Everyone has their own agenda when it comes to investing and private financial situations.
If shares are so cheap, CFO should be buying a boat load. £7k is pocket change
What are you going on about ?
CFO bought 20,000 shares at 33.4171p and now holds 29,950 shares. She spent a dizzying £6,683 on Watkin Jones shares. If that isn't a signal I'm not sure what is! Avoid this until they officially cut the dividend and then re-visit.
Nice to see. Can't imagine why they wouldn't at this level.
They do have debt, leases count as debt essentially because if you stop paying them, it's like a default.
Market is worried about something. I went through update and company expects to breakeven. It can be loss-making but I there does not seem to be any debt. We will find out soon but there is non-stop selling and nothing seems to be stopping it.
The net cash balance now covers half of the market cap.
Another trend which favours Watkins is selling down of inventory by private landlords, forcing students into the more expensive campus accommodation. Selling due to increased mortgages, removal of mortgage interest relief against income, increased legislation and fears of rent controls and reduced landlords’ rights by an incoming socialist government.
I had 50 rooms last year, 15 rooms now.
Crawshaw, I’m not sure what you meant by “liabilities “, but from the July update, this.
“ In line with recent announcements from other developers, we expect to increase our exceptional provision for remedial works for legacy properties by an additional £30m to £35m. This represents our current best estimate, primarily reflecting our intention to sign the Government's Responsible Actors Scheme, and our obligation to reimburse funds under the scheme, as well as an update to cost estimates on remedial works for properties provided for in FY22. The cash cost of this is expected to be spread over the next five years. We are reviewing details of the Welsh Developers Pact and await further information on the scope of the Scottish Safer Buildings Accord to understand any implications for the Group.”
The latest update repeats that.
It doesn’t change my opinion of WJG as a promising recovery play.
K3VMC, and information on their liabilities?
Doh! Half asleep still.
“ My btl properties grossing 20-25% year on year. ” Should be, “My btl rental revenues up 20-25% this year.