Member Info for MikeS02

MaryBr - Huge thanks for the link - can't see any dates though? Do you have something that shows the dates for the consolidation, or is this simply your thinking, although I know that the board said that once they'd received the votes, they would progress the consolidation quickly afterwards - would be great if you wouldn't mind sharing confirmation of the dates as trying to find it, is a nightmare!

Stille - Believe that the board has been implicit that they will carry out the dilution part sometime this year, although you'd think once the consolidation is done, why not progress the other part reasonably quickly afterwards, so that the SP can settle as the year progresses. I know that some posting on this board, believe that the dilution might not happen if the share price and profits are good enough not to warrant this next phase - I guess for me, the Q would be, why wouldn't the board simply press on with the dilution - let's be honest, it's no skin off their backs etc and what this will do is then protect the profits going forwards, ie they won't need to set them aside to pay off the German government etc and then they will have monies to invest in the business and in 2024, start a divi payment too - all of which makes sense to me?

Whilst I used to be a long time investor in NWG, I no longer am.

That said and like many on this board, I was certainly surprised at the SP this morning and thought I'd share some things from the presentation that may have facilitated the drop and indeed might continue into the near term:

1. It looks from the presentation that the bank believes that the bank rate will top out at 4% - I actually believe it will be at least 4.5% if not higher as the year progresses and how sticky inflation will be etc, but because of this, they are then only predicting a flat NIM at only 3.2%, which doesn't give any sense of profits flying into the future?
2. How can the Company make a 33% increase in operating profit and yet only a 12% increase in actual profit? Simply don't get the gap (unless it's all to do with taxes?) and of course that's probably my ignorance, so would be great to get views back on that - but whatever the road blocks, then suggestion is that these will continue into the future and which doesn't bode too well for future actual profit flying anytime soon
3. Payout ratio remains static at the 40% level - would have thought that with such a good interest environment, that that could have been uprated, but no - and whilst I know that there are huge variations to people's thinking about the use or otherwise of share buybacks, then the 'static nature' of further divi money coming directly to shareholders, think is a negative too
4. Finally of course there's the real tricky about how the economy will develop this year - have to say that I firmly believe that the economy will go into the red mid year onwards and with that, a pretty significant increase in lay offs etc, which of course will certainly tick up monies set aside for bad debts

So these were the main points that struck me and I'm sure others will have their thoughts too

Sorry, but I think you're all a bit delusional. Have no doubts that PSN will announce a significant slowing of sales - the last 7 weeks of 2022 was at a rate of 0.17 per site as per their update in early January 2023 and I don't think it will be much better. Analysts are now predicting a 2022 divi payment of 80p and I also believe that PSN will announce that payment of an interim divi will be dependent on how the market progresses this year, ie meaning it may be even pulled. Really think you ned to take off the rose tinted glasses - the market is in the doldrums and for PSN predicated on FTB's and indeed historic government support which has now disappeared, simply believe that this time around, results day will be painful - buckle up!

Hi donalb - Huge thanks and makes total sense - guess whenever governments get involved and in this case, the EU, things get very prolonged and messy - so will have to wait and see how things pan out - again, many thanks

Whilst I don't currently hold stock in Tui, I do believe that they've started to turn a corner and could do well in the coming years and as such, I may become an investor once the share consolidation and share dilution have worked their way through. What I'm pretty staggered by though and I know this could simply be my naivety on the matter, is why oh why Tui aren't getting all of this sorted quickly - and what I mean, is confirming the date for the consolidation; confirming a date for the dilution etc etc - WHY aren't they doing that and what am I missing? Would really appreciate insight please and many thanks in anticipation

Oh masaimara - Really? Private? Not sure what planet you're on, but it clearly isn't earth!

Hi Suresh and Steve - I copied the below out previously and Steve, you're undoubtedly thinking about the £ figure rather than the % - so Persimmon made approx £66k profit per home out of an average selling price of £237k and so their profit % per home is c28% - please take a look as you'd like and hope this helps

https://www.constructionenquirer.com/2022/03/02/persimmon-makes-66000-profit-per-house/

Not to rain on parades, but am I missing something - pretty likely as I'm just getting to grips with the world of homebuilders, and as such, would appreciate thoughts back on what I'm about to say:
1. Stock markets across the world are rising and there's clearly upward momentum right now and I strongly feel that that's positively impacting on homebuilders share prices alongside everyone else - most analysts believe that FOMO (fear of missing out) is driving markets and if that's true, that's a big problem going forwards, as at some stage, fundamentals take centre stage - guess into next week with the start of Europe reporting Q4 results will certainly be an interesting test to see whether it truly is FOMO winning out currently
2. Looking at Barratts results this morning, the ONLY reason for decent half year results it would appear to me is because of their forward book - but, that's declining rapidly and new bookings are down in January 23 vs 22 by 46% - surely both of these will affect 2023 and indeed 2024 results pretty substantially and let's be frank, Barratts full year completion projections for 2023 appear to be based on 'luck' that the market will somehow fundamentally change in the coming months - why would it? I get that mortgages are already falling, but at a snail's pace and with home prices set to fall pretty considerably in 2023/early 24, then I know what I'd do as a FTB - simply wait it out for now
4. Inflation has had a pretty good run in the last 3 months in terms of coming down, but actually that's the easy part as energy and other resources have peaked - but the services sector accounts for most of inflation in most countries and that's still going up in many areas and proving already to be much stickier - you only need a couple of months of bad inflation reads and the market momentum will change very quickly indeed and to the downside.
So I'll finish by stating that of course I understand that my commentary may well be viewed as naive by commentators on this board, but again, would simply caution that the worst may not yet be behind us

Hi Banbury - Totally agree with your sentiment and I'm sure many others agree ref keeping this board to sensible conversations with regards economics; the markets and of course thinking about PSN. You know my view though and if I'm able to be added to your book, my figure is indeed £11 for early Summer - VERY happy to prop up the book though!

Wiscos - Afraid I don't agree with your enthusiasm with regards the budget and them helping homebuilders anytime soon - If you think about Gove's relationship with homebuilders it's been pretty fractious to date and don't see that changing anytime soon - also Hunt has doubled down on any thought of tax cuts etc and whilst not directly related, believe it's their intention to make next month's budget a tight one with no give-aways at all, so that with a prevailing wind, they'll be able to do stuff into 2024 and ahead of the next GE - just think it's their mindset right now. Agree with your thinking ref late 2023 and into 24, but of course that leaves the next 6-9 months where things will have to remain tight on both the investment front and cost front - both of which will limit business

Just to add some thoughts:
1. Don't believe there will by any surprises in the 2022 results, as they've pretty much been announced at the last trading update. Guess the key metric that would move markets on results day is the Divi payment for 2022 and quite rightly PSN have given themselves lots of wriggle room with their new Divi policy - most analysts expect a payment around the £1.10 mark, but recently I've seen as low as 80p per share, so downside to £1.10 I would suggest would be taken quite negatively and also what they say about the policy for 2023.
The BIGGEST deal on the day though will be about what they say about recent trading and much more importantly, what they say about 2023 trading - of course this is against a backdrop of a declining housing market (-5 to -15% is what analysts believe for 2023) and interest rates likely to peak at 4.5% in May of this year, which will always have a play on the buying psychology.
IF PSN share lights of positivity, then clearly the price will rise, but if they err on the side of caution, which to be honest is what I'm expecting, then there is likely to be a retrace, which may be amplified based on what they say about the Divi for 2023.

Banburyboy, Many thanks for your post - I was simply reacting to stevebt saying that he knows 'exactly' how Persimmon is progressing - not me saying that and hence my commentary!

stevebt - if you truly work for Persimmon, you need to be VERY careful posting - insider trading is frown'd upon in ANY country! Beware

stevebt, Whilst I don't hold Persimmon it is a stock I'm keeping close to. Days like today simply happen from time to time, but it's not necessarily a start of something 'big'. So the UK is still facing a recession and Persimmon and other builders are yet to declare their end of year results and how the market's performing currently, which I'm afraid will likely be a downbeat assessment - Santander today said that UK prices were likely to fall at least 10% this year and others believe 15% falls are likely - so here's the question - why would I or indeed any other potential buyer, but any new home that in 12 months time could be 10% less in value that today and why would I buy with mortgage rates at 5% or higher right now? Surely these two fundamental Q's have a long way to run in 2023 and whilst today is brilliant for those holding the stock, I truly believe it's lows will be tested in the Summer/Autumn when the reality of interest rates and housing price declines will undoubtedly bite - clearly I know this is my assessment and simply wanted to share

Hi strictlybricks- Again, HUGE thanks for all your knowledge and much more importantly, wanting to share it - for which I truly am grateful.
Thanks again and hoping all your investments flourish

strictlybricks - As always, huge thanks for your insight and explanations - find them hugely valuable! Just a small point - I'm assuming as you shared the history but not your present views on possible land bank write downs into the next 6-12 months, that's it's simply too early to tell?

eccles04 and others suggesting a soft landing - whilst I don't currently invest in PSN, I'm keeping close to it and is certainly my favoured housebuilding stock if I decide to do so and the price is 'right'. As part of building my knowledge - excuse the pun, I thought I'd take a look at what happened at the financial crisis back in 2008 and whilst I accept that now is certainly 'not' a replica of 2008/9, there is one issue which I feel that many people commenting here are forgetting or are unaware of and that's whether house builders will have to downgrade the value of their land banks, which if so, could of course push them into a loss, if indeed it's accompanied by a significant reduction in home prices too. Whilst right now, my sense is that this scenario is not part of my central thinking, it's certainly one to bear in mind and I don't think we'd have any visibility of such a scenario until Autumn, Winter this year at the earliest. Would really appreciate views on the matter

Don't usually comment, as I find the vast majority of comments on the PSN really interesting. However, as some have commented about mortgages, I feel that it's important to share that in the short term, there are some pretty big hurdles coming up - so it's pretty baked in that interest rates in 2 weeks time will go to 4% and of course, the flow into lenders rates will increase too. Additionally, with core inflation not decreasing at all yesterday and headline only decreasing by a miserly 0.2%, then you have to think that the BOE will also highlight in their updated figures released at the same time as the interest rate information, that going forwards, rates will likely go higher still - the markets believe 4.5% by the Summer - unfortunately, I believe it will hit 5% and simply because inflation has a ways to go and it's simply not declining fast enough and again further rates will feed through to mortgages as well - I can ONLY see things getting better from an affordability point of view when the BOE signals that increases are 'done' and don't expect that signal til Summer either - any decreases in rates won't happen until 2024 earliest - so feel like we need to hang on to our hats for at least 6 months or so with house builder shares remaining under significant pressure til then

Tra1 - Totally agree - clearly sentiment is strongly to the upside at the start of 2023 and that's across world markets - however, not only might the US inflation figure update today provide some choppiness, but what lots of people seem to be forgetting, is Q4 earnings, which I certainly believe will be weak for markets and likely forward guidance will be weaker still. I certainly won't be buying PSN until their year end results early March and to see whether the very poor sales in the last 7 weeks of 2022 continue into what should be a much more positive environment towards Spring and of course what that means for conserving cash and the divi, which most analysts are suggesting will be cut in half. They are absolutely doing the correct things, but believe there are a few 'niggles' in todays report which are concerning to me too. Investors need to remember that when there is upward momentum 'generally' as there is currently, markets and investors tend to be 'kind', BUT when things turn a little bit more ugly, then believe that the price will fall below it's 52 week low of £11.13 - Totally get this is my view only, but having invested for a while, I get how volatile things can get and lets remember, the WHOLE world has high inflation and a cost of living crisis.

Hi Strictly and all, Huge thanks for your reply as below and have found your posts hugely helpful.
Just a final thing to share about costs and then I'll move on, but it may help.
I've provided a link below which shows that Persimmon made a £66k profit per home built in 2021, with an average sold price of £237k - this figure is also supported by many others reporting the results, so certainly seems like trusted figures. If you simply then take one from the other, it suggests that ALL costs associated with building and selling each home was approx £171k - as they built and sold 14,551 homes in 2021, suggests TOTAL costs associated with building and selling these came out at approx £249 Million for the year. Hopefully this all makes sense and ties up, but my key reason for wanting to know and indeed sharing is that based on a projected end of year cash figure of £700 Million, which is what the company shared at it's November update, then they should feel confident in sharing approx £450 Million in shareholder dividends, which could be approx £1.43 per share when they announce in March 2023 - what I say may be nonsensical, but if it helps, happy to share

https://www.constructionenquirer.com/2022/03/02/persimmon-makes-66000-profit-per-house/