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Hi Matt,
I was probably to hasty quoting figures but had had a look at H1 2021 1079 vs H1 2019 1005 and op profit if about 7%. up. Not flat but not massive either. I guess my point stands that the revaluation of assets due to interest rates is the main driver in the EPS figure. You could say this is long overdue but it does misguide investors and this will be the main reason for the eps and roe bump. Their LG capital division does seem to be a higher growth area. I guess this must be funds under management, esg funds, etf’s etc which have attracted a lot of money and will probably continue to do so.
Investors here need to realise this is a low growth but very solid business so gains are not quick and SP move’s more glacier like not like it’s going to be £3 before the end of the day and £4 by the end of the month!
Has anyone actually read the report? Operating Profits are essentially flat and the increase has come from no further covid costs and the prospect of higher interest rates boosting their investment book (I think). Check the variance line further down.
I think I would have expected better. Hopefully some others can provide further analysis.
I sold out at about 1.15 maybe 4-5 months ago after buying at 0.95 or so in 2020. There was a share issue so existing shareholders were diluted. This smacks of under the radar capital raising so any dividends you’ve received would be cancelled out by this dilution whether you subscribed to the issue or not via the SP drop.
In my mind this will hamper further dividend growth and share price. I’d prefer less debt and less dividend so more capital could be put to work buying assets rather than paying through the nose for capital via an external hedge fund.
I might be wrong but buying just for the dividend has caught me out before so for me it was hit the exit.
If they had access to 1bn in funding from oaktree why raise equity. I think looking to take advantage of a frothy market with fundraising. Looking at primary bid your holdings could be diluted by up 20%. Am glad I sold out last week to be honest.
I would disagree about book value. I think the superior returns of Redrow and Bellway over PSN in the last 8 years would indicate which have been the better investments. As PSN is on such a high valuation of course there won’t be as much room for sp growth compare to other builders which is what probably has happened here. I do agree with both sentiments though that in the coming few years the sector is on a one way ticket upwards but as always some will probably perform better than others. Inflation and interest rates are likely to assert some clouds within the next 12-24 months although will be tempered if strong growth in employment and pay.
I do feel that if you place a higher score on p/bv then you will limit your downturn compare to a higher rated shares. This is what will happen to tech stocks when the fed stops printing easy money and the tapering begins / rates increase.
Ok thanks - what kind of special payout are you expecting - Same 10.7p again? I can see makes would make a 10% yield at current sp. Obviously no issues with sp basically flatlining since circa 2014?
I love a divi stock as much as anyone else but it seems to be divi or nothing for TW. I do have some DGOC, LGEN & Bats as my high yielding with some IT's alongside like henderson far east yielding 7% currently.
Hi - Just curious but why do investors here prefer this share to say Bellway or Redrow? Bellway for instance kept paying a dividend although reduced even through 2020. Also why hold house builders for dividends? Surely these are lumpy as and when the bad times come in as they do every so often. Eg: LGEN, BATS, energy stocks pays a rising dividend even during the bad times if thats what investors need. I do admit to holding a couple house builders in a dividend portfolio as well as the growth one but mainly for capital growth which has been strong this year. Just interested in views. Thanks
Hi Vlad - yes same from the DT. Can’t remember mentioning M&G out loud but I have looked at it but I just dismissed as a value trap. However as you said you’d probably get a year or 2 SP growth before it starts sliding back.
Strictly - I can imagine the 20% plus return for your friend. I think Bellway has returned that in around the last 6 weeks. I picked up at £28 and is now 20% up on that. Lucky hit that one. Redrow has returned around 16% over that period so maybe will catch up?
Hi Vlad, M&G is always top of the yield list...I just thought was a value trap however I did start reading up and it’s actually spun out of Prudential which I thought was a well run company so did think may be worth looking into. Will this not be a very cyclical company depending on the wind of the economy ie at the moment people are pouring money into ISA’s, pensions etc so funds under management will continue to grow for the moment. Maybe in a year or 2 the sugar rush of the Biden bounce, furlough money etc will wear off and interest rates will climb and share prices will retrench funds under management will reduce...?
Looks like the cladding news has pulled all housebuilders down. Not sure if BWY is exposed but nothing in their trading statement whereas PSN has set aside some money. I imagine costs will be fairly limited to housebuilders as they were following government guidelines so really taxpayers are going to pickup the bill.
I would just top up if you have spare £££
Just need some more patience. Balance sheet looks good with a big, growing cash pile and record investment in land plots. Focusing on higher value properties before help to buy cap shows the company can move quickly to alter strategy. A lot to like in this update. Imagine Redrow and other house builders will go the same way.