Member Info for Josh95

Overweight BUY recommendation issued! 12 month price target upgraded to £6.50.

Overweight BUY rating issued.. 12 month price target 1300p!

I think its due to several factors. Firstly the ROCE is relatively low compared to sector peers coupled together with weaker than average margins. Before the interims were released Bovis rallied strongly as the city expected a strong first half set of figures and progress on these two key metrics. I think many were disappointed by the lack of progress on margin growth and ROCE compared to phenomenal growth figures from the likes of Redrow and Persimmon on this front leading to a temporary decline in the share price until improvements are made. In addition Black Rock have aggressively sold part of their stake which did not help, and the stock is now trading ex dividend of 13.7p so the real comparative is about £10.40 or a 160/1200 = 13.3% decline from £12 high. But there are several issues to consider here, firstly Bovis's first half performance is light on volume and completions this year are expected to be far more heavily weighted the second half of the financial year. Naturally this will yield stronger ROCE growth as revenues and profits are uplifted further due to the stronger second half volumes. Secondly the mix of completions in the first half was much more heavily weighted to social completions which are a much lower margin. This contributed to weaker than expected margin growth but again the second half of this years figures should rectify this by caputuring a strong weighting of more lucrative private completions. Bovis trades on a heavy discount to sector peers on a NAV basis. Traditionally a low price to book multiple has been associated with a weaker than average ROCE. Currently Bovis has been adding to its landbank significantly in preparation for its strategy to double volumes over the next 3-4 years or so. Increasing the landbank increases the capital base or equivelantly lowers the ROCE, but when volumes increase over the coming years this will drive revenues and ROCE. In addition Bovis operates in the parts of the UK set to enjoy the strongest house price growth. This growth will help drive ROCE still as ASP's and thus revenue and profits grow, in addition to helping drive margins. So you see, the weak ROCE and margins associated with the low valuation on a pe and PB basis are only temporarily low; we are in the early stages of Bovi's business strategy that is just about to start to kick in with higher volumes and returns. It is clear Jim Slater recognizes this too and why he rates it as a very strong buy. As ROCE and margins grow in line with the business strategy the substantial discount to sector peers will be eliminated moving Bovis well into the upper quartlle of sector returns. Certainly one of the most compelling buys in the sector at these levels. Not long until results now in February either.

The ex dividend date is Dec 24th, http://www.dakotafinancialnews.com/inland-homes-plc-declares-dividend-of-gbx-0-70-inl/578209/

Brilliant results and as others have said already i think the rise has only been dampened today by some short term profit taking. As analysts digest the results i expect upgraded price targets to materialise which should help support upward momentum here. Simon thompson will surely write an updated buy case over the next few days too which always gives us a nice rise. I had a strange dream last night. I dreamt inland homes results had finally been released and the shares were trading at 88pence! So imagine my surprise this morning when i awoke to see these fantastic results (i was expecting friday). Maybe not 80p today but i dont think it will be too long before see do see 80p plus! Cm- tw. Dont operate in the us and in addition spanish completions represent a negligible part of their business operations! Agree though gains are likely to slow at tw as volumes near their 14k soft cap. It is for that reason i have swirched into bovis, inl, crest, rdw and smp now all of which offer better growth prospects. Gla

Yes, supposedly will be posted in October giving the board up to and including Friday for publication. It's just a matter of waiting patiently, fingers crossed there will be no further delay. Good to see us drifting up slowly. GLA

Historical under performance is no basis for investment what so ever as this implies the market is inefficient with respect to historical information. Many academic studies have proven financial markets are what we call semi-strong form efficient (google the efficient market hypothesis if you're interested) which implies that no one can consistently beat the market by trading on historical information such as past prices which is what you would be doing, or indeed what so called "technical analysts" attempt to do by identifying patterns- again proven academically to be pretty useless. In reality any such pricing discrepancies are eliminated instantaneously via arbitrage. To try and beat the market we need to look deeper than that! We need to analyse the businesses strategies and their ability to implement these. We need to understand the prevailing macro and micro economic conditions and the markets in which the businesses operate. From this information we can make informed forecasts on the likely growth and earnings potential of these businesses and make considered investment decisions on which stocks are likely to provide the best returns moving forward. You are best to completely ignored historical performance and concentrate on the business fundamentals moving forward. The fundamentals are extremely strong for Bovis Homes, but they are also very strong for two of the top performers- Crest Nicholson and Redrow. All these three aim to significantly increase output over the coming years which will in turn fatten the bottom learn, earnings per share and profit distributions to shareholders through dividends.

I just checked their latest annual report and the 1.1bn revenue for last financial year is broken down as follows: North 282 Central 304 South 326 Greater London 238 1,150 Also interesting to note the groups target for 2018 revenue has been revised up to 1.6bn and they have now set a target of 62pence EPS for 2018, which yields an implied forward pe ratio for 2018 of 7.5 so still an excellent growth stock! Good rise for redrow today and the sector in general this week.

Hi Ben, No problem. Yes I am still in Inland Homes and currently hold c. 40,000 shares which is a reasonable chunk of my portfolio. I'm not worried about the delay in results at all, although it is frustrating for us personal investors and has caused some short term volatility in the share price nothing has changed fundamentally and it is reassuring that management continue to re-iterate, despite the accounting delay, that the profits will come in well ahead of market expections and 170%+ growth in EPS looks likely. The Investor Relations department at INL is amateurish (but this is partly expected given it is an AIM stock) and although several delays in the publication of results don't show the company in the best light, the management know what they are doing and as major shareholders of the company and co founders we can rely on them to produce results and get the best value for us shareholders so our investment is in safe hands. As an AIM stock INL is also relatively illiquid compared to a shares like Taylor Wimpey which is moved by institutional investors. A very small stock like Inland Homes is heavily influenced by us personal investors especially given the huge following Inland Homes has on Investors Chronicle and the growing following on here. The land bank at Inl is worth c. £1 a share on a break up basis so I am holding tight for around a quid for now atleast. Hopefully results will be out soon- they have stated October which gives them until Friday next week. The implementation of IFRS 10 could well boost the financial metrics further. Ultimately I think Inland would be a very good fit for Bovis Homes to buy, given its landbank is in prime areas in the South East where Bovis operate most heavily. GLA

Bovis is very heavily weighted to the South East of England and plans for 80% of completions to be within this area. The South East is forecast to enjoy the strongest house price growth over the next 5 years (26.4% compared to a national average of 19.3%). This heavy southern weighting is likely to fatten Bovis's margins and bottom line significantly, and one of just many reasons I rate Bovis as a very strong buy: http://www.thisismoney.co.uk/money/mortgageshome/article-1671748/House-prices-What-expect-news-predictions.html

Thanks 2227. As you know I also hold SMP, its more of a hybrid builder/developer which is why I didn't mention it below but it is likley to do very, very well over the coming years. Historically it has traded at an average of twice NAV, and the price to book multiple for November is forecast to be just below 1! I can easily see SMP doubling inside 3 years, and it has a trading up date in December which should hopefully push us back towards £5 before results, fingers crossed. It's current pe ratio is a laughable 4 times on a trailing twelve month basis (TTM) but the timings of their commercial deals means a cyclically adjusted pe (Cape) ratio is more meaningful for analysis. Like you have always noticed, Redrow tends to outperform analyst expectations so in the end the peg ratio for the current year is likely to be lower than that forecast, but with Bovis you just know the peg has to stay low as they are still growing from 3600 units to 6000 over the next few years! I'm also in Inland Homes, which is another interesting one.. results were due out this week but have been delayed which is causing some volatility. Urban and Civic are another one to watch, both Urban and Civic and St Modwen have massive landbanks for their size, and as the sector heats up and demand for land grows the value of their land holdings is likely to rise which bodes well. SMP is Investor Chronicles growth tip of they year, but has not done much yet but I feel it will take off when we least expect it! Just one to tuck away for a few years at least! Good rise for Bovis and Redrow today! GLA.. we are entering trading update and management statement territory now over the next few months and then we have Crest Nicholson's full year results in Jan to look forward to and Bovis's full year results in Feb before the reporting season kicks into full swing! Lets hope its a repeat of the last couple of years!

Hi Nige, Yes Bovis is very heavily weighted to the South, and furthermore it plans to increase this weighting to 80% of its volume. This is one of the main attractions to Bovis for me, and Jim Slater has also previously written about how this is an attraction for him too. The reason being that demand in southern england is strongest, and demand is outstripping supply. As we know from simple microeconomics, when demand outstrips supply prices rise. That is why south east england is forecast to enjoy the strongest house price growth over the next 3-5 years. And house price growth means fattening margins for Bovis. There are some concerns about build costs, but build costs make up a relatively small percentage of a houses price and at the moment and moving forward are likely to be more than offset by the rises in house prices thereby feeding through into the bottom line for Bovis Homes. This is all part of Bovis's strategy, and Crest Nicholson to a similar degree but Crest Nicholson is also heavily weighted to London , surrounding areas. Have a look at this link which explains the areas Bovis are building in are likely to enjoy the strongest house price growth: http://www.thisismoney.co.uk/money/mortgageshome/article-1671748/House-prices-What-expect-news-predictions.html Bdev and Persimmon have done very, very well, but PSN especially is more of an income play now as is TW IMO. There is some room for share price growth left, but TW for instance is fast approaching its 14,000 unit soft cap, after that the EPS won't grow much and it will just return large chunks of cash to shareholders. I'm a fan of Bellway too but don't actually own any at the moment. I don't think the market is over heating in the south, the south is still relatively affordable on price a variety of metrics and the government are keen to prevent further house price bubbles. Interest rates will rise next year, very slowly and this will be good for the stability of house builders and preventing bubbles. London looks expensive in alot of areas.

I hold redrow, crest and Bovis and sayn this trio are where the value is at in the out and out house-builders moving forward. However, the stand out bargain is Bovis homes, and it is extremely difficult to argue against this case given Bovis trades on the lowest Price to book multiple of 1.5 times and the NAV is growing fast which will reduce this further. In addition, it is not the historical peg ratio that is of any note which is the one you have been looking at 2227. The historical peg for RDW was 0.2 this year which tells you if you bought last year like we did you got great value for the growth in EPS the firm produced. However the forward PEG is what matters as this captures the value moving forward which is all we care about. For Redrow the forecasted PEG is 0.7 for this financial year; analysts are not expecting it to produce massive growth this year. For Bovis homes however the historical peg is 0.1 with a forecasted peg for the next two years much lower than redrow at 0.4. The peg is forecasted to be so low for Bovis because it has a clear strategy to double volumes so this will remain this low for 4 years until volumes have doubled. Redrow however has not outlined its exact strategy on its optimal output scale like crest, tw and BVS have and it is therefore hard to forecast where it is growing volumes to, so its more of a case of wait and see although the low dividend and reinvestments of profit bode well for growth prospects. Both will do well but Bovis slightly better value IMO- the dividend yield is also superior at Bovis at 4% and growing fast. All will do well but for me Bovis is the biggest bargain.

I managed to get some more at 9.85 last week, couldnt believe my luck- this is by far one of the most undervalued builders in the sector and it wont be long until the discount to sector peers is eliminated. Bovis trades at a 45% discount to sector peers on a price to book multiple of just 1.5 times and the strategy to double volumes over c the next 4 years should produce the lowest peg ratio in the sector. Could last week have been the bottom? Over the last couple of years bovis has dipped to a low mid october and then rallied strongly until feb results. I benefitted from buying in this time last year at c 750p. Was hoping we'd stay low until the dividend is paid in nov which will provide further sp support, but glad to see us up nearly 5% over the last two days! Bovis was a steal at £10! The downward pressure on the share price was partly caused by blackrock trimming their position to below 5% as detailed in yeaterdays rns. Lets hope theyre finished selling now., although any further disposal could provide further strong buying opportunities! Very strong buy, as agreed by jim slater! Best value in the sector.

Very frustrating, I agree this doesn't look particularly good on the company and the application of IFRS 10 should have been sorted out by now- INL and the auditors have had plenty of time. Reassuring management re-iterate profits are significantly ahead of consensus forecasts though. Very strange, maybe something is going on who knows. GLA

Hi Bazz, I like all of those and hold Bovis, Crest, Redrow and SMP in varying proportions. All are rapidly growing which is what has attracted me to trim my holdings in the bigger builders as they approach optimal output capacity (as share price growth will then slow) and add in these growth stocks instead. Bovis is a screaming buy indeed right now, and has drifted down on light volume having fallen out of favour with the market since its iterim results, creating a superb buy opportunity.One of the main concerns was the lack of improvement in ROCE and margins, but once the business model is fully understood (Bovis aim to increase output from c. 3.5k units to 6k units with an 80% weighting to the South East where house price growth is strongest) and one factors in the fact that completions are more heavily weighted to the second half figures this year, as well as stronger mix of higher margin privates it is clear that these concerns are only temporary and it will only be a matter of time before the rapidly growing unit output grows revenues inturn increasing ROCE and margin growth arises from the groups strong strategic landbank and heavy house price appreciation in the SE. All the above contribute to the lowest PEG ratio in the sector moving forward which is why I believe Jim Slater rates the stock as such a strong buy. Bovis Trades on a forward average 3yr average pe ratio of just 7.9 times, with a pe of c. 6.9 and a market leading dividend yield of 7% 3 years out! These are metrics that easily support a doubling of the share price to c. £18 resulting in a pe ratio in line with the sector average of c. 14 times. Bovis also trade at a 45% discount to average sector price book multiple, a discount usually associated with weak ROCE but as the business model unfolds it is only a matter of time before this discount to sector peers is removed through arbitrage. Crest Nicholson is another great pick- strong weighting in the South East and London, with an excellent landbank and equally strong dividend yield. Crest also have a strategy to add significantly to output over the coming years, but not quite to the extend of Bovis, which should underpin strong growth in EPS and deliver excellent returns to shareholders. Both Bovis and Crest have some of the highest % gain price targets penciled in by brokers and another attraction is both deliver results in Feb and Jan respectively. I'm also a big fan of Redrow and Steve Morgans stewardship. Redrow hasn't really outlined its output strategy in its annual reports so it is harder to forecast earnings growth potential- but Steve Morgan is an astute leader and with the low dividend instead being reinvsted into growing the business I believe Redrow to be another excellent growth pick in the sector. I suggest familiaring yourself with each of the businesses strategies and management teams and deciding which you think you'd rather invest in. Very much looking forward to results here tomorro

I agree with you that Bovis looks an excellent prospect indeed with a very low pef, but can't understand some of your price targets. Currently trading at just under £10. Volume growth could easily see the share double but I can't see it reaching £40 myself, my target is £18-£20 over the next 2-3 years. Redrow, Crest Nicholson, Inland and St Modwen all very good prospects too.

Not often you get to purchase such a great growth stock tipped by Jim Slater as a VERY STRONG BUY at below his recommendation! Bovis has drifted down on light volume llately but the buy case looks utterly compelling. Historically Bovis has also enjoyed an extremely strong run from now until results in February! Fingers crossed for more of the same! GLA

"At the present price of £10.17 the financial statistics support their case. The trading update before the interim results was very positive, with average sales prices up by 6pc and “a further increase in return on capital employed supported by robust profit margins ”. The prospective p/e ratio is only 9 and the consensus growth forecast more than 19pc. The dividend yield, currently at 4.3pc and rising fast, is attractive. Bovis shares remain a very strong buy."

No way of telling Tom, as share prices rarely reflect the true value of a business as it is merely a case of holding until you get the price you want. I am sure we will see a £1 a share here over the next year or so if not taken over before hand. Sain- I've not made any losses trading Bovis, infact I am sitting on a very nice profit having bought in at £7.50 last October. I have been topping up lately though as Bovis under a £10 is easily one of the best buys in the sector as Jim Slater has recently highlighted with his very strong buy recommendation. I have sold off some Telford Homes DRIP shares I still had as TEF is starting to look expensive now which is why I believe Jim Slater has slashed his rating on the stock to a hold. I'd be taking a very close look at Bovis if I were you- there is a reason Jim Slater rates the stock as his top pick in the sector and also a reason why nearly every broker has price targets for the stock which would result in the strongest capital gains in the sector over the next 12 months.