Member Info for cyberduck

https://www.property-magazine.eu/mg-and-redrow-homes-agree-on-82-million-btr-deal-in-north-london-48255.html

https://www.theconstructionindex.co.uk/news/view/redrow-plans-thames-valley-division

“Outer London, and particularly the areas just outside of the M25, are a growth area for Redrow. Redrow already has a successful presence in Reading, Bracknell, Oxford and High Wycombe, therefore it makes sense to open a permanent regional office within the area."

In March PB said they would spend the £125M cash in 3 ways:

1) An accelerated rollout in the US
2) Entry into new geographic markets
3) Fund technological innovation and expansion of Purplebricks' service offering

So far there have been announcements relating to 1 & 2.

In regard to 3) they elaborated:

"Purplebricks aims to continue to invest in innovation to cement its strong position in traditional and hybrid/online markets. In particular it will seek to develop better, more rapid methods of communication, as well as best in class search functionality, additional advertising and marketing options for sellers and information for customers.

As part of a strategy to build on its current service offering, Purplebricks aims to create longer lifetime relationships with its customers so they stay engaged with the brand for the period between moving into their new home and when they come to sell the property and it will look to engage with more of the buyers who visit the site (over 1 million searches a month in the UK). Alongside this, the Board are exploring ancillary services and additional revenue opportunities which are yet to fully embrace technology as it believes Purplebricks is well placed to provide a superior customer experience, reduce friction in the transaction process and speed up transaction times in these markets."

This third category, especially something to "reduce friction in the transaction process and speed up transaction times in these markets" could allow them to provide a much better service than their competitors who according to a mystery shopping survey of 30,000 branches fail to answer 40% of email enquiries and still rely on the telephone for most of their post-sales process.

For me this is a sign that the investors are there for some time yet. Entering at a difficult time in the Canadian market suggests that the slow progress elsewhere was known about and when the results come out it will be no surprise to them.

Still a big gamble but as long as the backers are there for the medium/long term there's a chance it will come good in the end.

Too volatile & risky a share for me at these levels but perhaps some of my concerns addressed.

https://www.afr.com/real-estate/residential/eight-listings-the-magic-number-but-unachievable-at-purplebricks-20180627-h11x4h

"from June 1 -18, shows that only a 176 listings had been secured over the period – just over a quarter of the monthly target – with sales numbers (125 out of a target of 423) also well down."

"State-by-state, Purplebricks agents in NSW are faring the worst, with 30 agents managing just 42 listings between them and just 27 sales. Among the 30, three territory owners have left or are in the process of leaving."

BalfronSocial,

I'm pretty sure the share prices for the whole housbuilder sector has dropped in recent weeks.

Check out the share price graphs for RDW, BWY and CRST.

Sain/Jimmy,

The 250% was comparing a full year to a part year.

Look at the Hardman report and you can see the UK grew from 35 LPEs to 135 from 2015 to 2016. Listings from 4330 to 19200.

In Oz, Hardman were talking about losses of £11m over 2 years before break-even. PB in their original announcement said they would invest £10m http://www.lse.co.uk/share-regulatory-news.asp?shareprice=PURP&ArticleCode=z8zapuzy&ArticleHeadline=Launch_of_business_in_Australia.

In H1 2018 losses were £5M and that was on turnover of £6.8M. PB recently gave guidance of £12M turnover (so £5.2M for H2) for the full year, so when they talk about being on target, it looks like they are talking about drastically reduced targets but there's never any mention of this.

Today PB have 87 LPEs in Oz (according to their website https://www.purplebricks.com.au/search-local-expert?ref=header). Back in September 2017 it was reported by Zeus Capital that they had over 100 LPEs "in Australia they’ve got over 100 LPEs and growing" when answering the question "How can investors monitor the company’s success in the UK, Australia and USA?" My own data supports this statement.

I posted the link previously but it was modified. I'll try again https://www.directorstalkinterviews.com/purplebricks-group-plc-qa-zeus-capital-launch-purplebricks-usa-lonpurp/412735688

If modified again the domain is directorstalkinterviews dot com.

https://realassets.ipe.com/news/crest-nicolson-and-mg-real-estate-extend-uk-prs-partnership/realassets.ipe.com/news/crest-nicolson-and-mg-real-estate-extend-uk-prs-partnership/10025371.fullarticle

“Stimulating new housing markets such as the private rental sector is the only way that the industry and Government will be able to accelerate housing delivery and meet ambitious home building targets."

https://www.afr.com/real-estate/residential/26-listings-for-27-agents-purplebricks-agents-struggle-to-win-new-listings-20180621-h11nzt

"internal sales documents obtained by The Australian Financial Review shows how tough things have become for the fixed-fee operator in the slowing NSW housing market.

Covering the first two weeks of June, the documents shows that 27 NSW Purplebricks agents won a combined 26 listings, converting 21 per cent of the 123 home appraisals they conducted over the period."

>Sector is hardly considered exciting for any number of reasons (which for some of us is a good thing). James, this reminded me of something Strictly said when I mentioned BWY's historically low p/e values a while back. he said "perhaps it had something to do with interest rates". So perhaps that explains it. Builders aren't traditionally thought of as exciting growth stocks and their yield compared to the prevailing return on cash is perhaps a large factor. I've just checked back to the period I reviewed and BOE rates must average a bit less than 5% during the period. So perhaps a yield of 8% for CRST compared to the current 0.5% BOE rate is the key to at least maintaining current SP's. Even TEF offering 4.4% covered 3 times compared to a questionable 2 times for CRST.

I'm fairly new to this sector but some time ago I thought I'd take a look at historical p/e ratios to get an idea whether the p/e ratios I was seeing were typical. I looked at BWY originally then did the same for PSN some time later. I looked at a date each year which for each company was just after the annual results announcement. Then used the SP at that time and the EPS value from the results to come up with a p/e for that year. I was shocked to see that the companies were trading on much lower p/e ratios than they are these days. Between 1997 and 2007 incl. PSN's average was 4.89 and BWY's 4.76. The companies were growing earnings really well during this period. PSN had an average ROE of 21.63% and BWY 20.47%. Like I say I'm fairly new to the sector and I'm looking for somebody experienced to tell me why "it's different now". It's hard finding historical data of p/e ratios for the market in general but I did see somewhere that the FTSE 250 had a p/e ratio of 22.5 in 1999. The value at the end of 2017 was 18.7 which is apparently below the average (which isn't mentioned in the article I read). So it doesn't look like the p/e ratios were generally lower in those days. Lately I've been thinking that with CRST's div. yield at 8% the SP can't get much lower but who's to say we don't have a selloff every time a company gives a trading update suggesting lower future profits? Is there any argument to support BWY's p/e ratio being 8 for example rather than closer to the average of 4.76 prior to the 2008 financial crisis?

https://www.afr.com/real-estate/broke-real-estate-agents-quitting-purplebricks-as-market-slows-20180618-h11ikb 'Purplebricks territory owners (franchisees) and agents, who spoke to the Financial Review, said they were struggling to make a living and were preparing exit paths after the $100,000 to $180,000-a-year salaries they were told they could earn failed to materialise. "There's no money in it. The business model is flawed," said a current franchisee. "I've sold 50 properties in 18 months and I'm broke," said another agent who recently quit.'

And I should add that selling expenses and finance is anticipated to be about 8% for open-market and 1% for BTR.

From the 2018 results... BTR: "the Group's target margins are still expected to be around 12 to 13 per cent to remain competitive in the land market but also to remain attractive to build to rent investors and their yield requirements" Open-Market "The margin recognised on open market homes is expected to trend down towards the target margin over time as older developments which benefitted from more significant sales price inflation and minimal build cost inflation are replaced with sites appraised more recently" The open-market target margin is 24%.

Maybe reading too much into it but from the latest webcast from JDS "well on track to deliver over £50m of pbt in the year ending 31st March 2019 and the challenge ahead really is to keep doing that, to build a business that can deliver more than £50m every single year" For me this suggests there are perhaps questionmarks over 2020 and perhaps further on too. It always seemed odd to me that TEF were happy to give 3 year forecasts and then stopped doing it. Is this because 2018 & 2019 were always going to be exceptional years? Brokers are suggesting 5% growth of earnings for 2020. Then 7.5% for 2021.

Terrace, Not wanting to get into too much detail but yes, you are right, pure BTR would not mean 50% lower operational margins. I remember the deal with Greystar being based on typical BTR margins so perhaps that deal is not something that TEF can improve on by reducing costs and even if they can this might not be the case going forwards. Whether any deals made in the current market are as good as earlier ones is also a valid question. I just get very nervous when I see 100% EPS growth over 4/5 years being mentioned. Nobody from TEF have ever suggested this. The figures you've just posted suggest something like 40% over 4 years.

TEF can't rely purely on BTR. If they double the number of units over 5 years but they transition from pure "open market" to pure BTR then profits are going to remain flat. Clearly they aren't currently purely "open market" but with margins at 13% on BTR and 24% on "open market" then you can forget about doubling EPS unless they increase the number of units by a lot more than double. They said they thought they would double the number of units at the last AGM. Not to be confused with profit or EPS.

I'm looking forward to hearing what PB have to say about current trading and outlook for the UK and Oz. Oz must be a bit of a concern. On turnover of £6.8M in H1 they made a loss of £5.1m. Guidance for the year was £12M turnover and fees went up by quite a lot.

Strictly, Check out the webcast interview with JDS https://www.telfordhomes-ir.london/media/webcasts/telford-homes-plc-final-results-2/

Strictly, I am clueless when it comes to BVS apart from the snippets I pick up from you. In the time I've been following CRST (probably 7 or 8 months) they've always been the "best value" on a prospective p/e ratio basis over 12 and 24 months. They have also been the best value using your system if you give them anything above an 80% weighting. The way I see things is that "the market" is very dim and react more to "news" than fundamentals. If BVS turned round market sentiment quickly then did they perhaps fool the market with some spin?