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Strictly,
I no longer hold any crest shares. The only thing going for it is PBV, but that’s not all it seems when you delve a little deeper.
£585m of liabilities, plus the £552 market cap would give a total cost of £1,137m if you were to acquire the assets outright. Take away the 163.6m of cash on the balance sheet and you could effectively purchase £1108m of inventories for £973.4m, which is only a 12% discount. Now factor in those assets should probably be impaired at least 12% to reflect current market conditions, and there’s no discount on book value.
Morning Strictly,
I trust your figures are correct. As you know, I also used to see crest as being best perceived value, due to PBV, but not any more. It’s clear that this isn’t run as well as other house builders, hence the poor shareholder returns.
Take your 4.5p EPS figure, even if they paid all of that out in a divi, the yield would be circa 2%. While I agree the market cap undervalues the assets, I don’t think this is a good investment for shareholders with the current BOD at the wheel, and the SP will most likely go back down when the FY results come out next week.
It seems to me that they’re just trying to soften the blow when the FY results come out next week. Think the change in net cash will make grim reading. Is the divi safe?
Perhaps they should just keep selling bits off then to service the debt….
Sounds like a plan.
Perhaps you’ll be singing a different tune when you start getting the interest on your cash, instead of the investment platforms?
I would imagine most of the income these platforms make is derived from retaining interest on cash deposits, so a 10% fall is nowhere near prices this in imo. Trading212 just announced they’ll start paying 4.5% on GBP deposits.
Do you like talking to yourself Mary?
if you cut the bs and just look at the figures, house prices declined from £259k to £258k… so it really depends on whether or not you buy into the seasonal adjustment *******s.
halifax data is out tomorrow. if they stick to the facts instead of seasonally adjusting, it could be a bad day for housebuilders.
Can’t see going that low…
Steve, I don’t recall Bdev or Tw ever trading anywhere near 3x pbv? Their share price raised from the dumps because it was highly likely they would go bust due to liquidity issues around 2008, but they still never recovered to 2007 highs.
Strictly,
You put a post up here about PSN a few months back which I found very interesting, explaining how king Jeff did something that was unsustainable which bumped the share price up, but I can’t remember the details?
On a side note, I’d be interested to know your thoughts on the crest TU? I wasn’t impressed with the SPOW rate still being lower that everyone else, and how the net cash is dwindling so I jumped ship…
Steve, past performance is no guide to futures returns. There was something that led to this being pumped up to £29 that won’t happen again. Strictly put a post up a few months ago explaining, but I can’t remember the details.
Afternoon crossley,
I had a stop loss set at 185 for my remaining holding, so I’m out completely now. Don’t get my wrong, I still like the company, but it’s drifting back to 170, I don’t think it will revisit the 150’s, but who knows in this market? Anyway, there’s no point being in a falling knife.
I think you’re right, there’s not going to be enough cash in the pot to pay a divi. Springfield recently got in a similar situation and had to scrap the divi, and the share price went well below 0.5x book (I think about 0.35x?).
The trading update could’ve been worse, but could’ve been better.
I sold half my holding yesterday afternoon, and am just keeping the powder dry for now.
I see long term gain here, but I think it’s inevitable this will drift back down to 170 in the short term. Nothings really changed since it was 170 only 2 days ago. The fall in inflation was expected anyway.
I am probably in too heavy here, although it has played out very nicely thus far. I may sell half my holding later today and buy back in the morning just to make sure I can get some sleep tonight.
Thanks Crossley. Do I take it you’ve sold the holding you bought yesterday then? I’m in profit as it stands so shouldn’t go underwater if the TU isn’t favourable.
I will admit, I am a little nervous about tomorrow’s update. Looking at the website, they seem to be giving a lot of incentives on properties (around £25k) in an attempt to get them sold.
The market is so fickle at the moment so there could be some pain tomorrow, but I’m in for the long term.
Morning Crossley,
Crest had a dry spell on the last trading update, with a SPOW of just 0.25 and the market threw the baby out with the bath water.
There can be no doubt crest is still the best priced housebuilder, even after the rise, it’s still trading at c.45% discount on its net tangible asset value. Absolutely crazy.
The update could well have been leaked. What’s particularly interesting is it that it looks pretty clear to me the last update was leaked. It fell sharply from 226 to about 190 in the run up to the update, and then fell a further ~10% to around 170 on the day of the update.
Any company can have a dry period for sales, particularly with the economic headwinds it’s had, but times are changing with inflation now at 4.6%, mortgages will reduce, sales will pick up.
Always remember the strength and security is in the balance sheet here.
Slow,
You’re on the wrong board. This is PSN, a housebuilder.
P.s we’re not interested in a dead cat bounce.
So, the inflation data is out on Wednesday.
There’s an article in the Telegraph (behind a paywall) explaining the below. I won’t copy it word for word I don’t infringe any copyright, but here is the general gist of it:
They’re tipping a big drop in the inflation rate on Wednesday from last months 6.7% to around 4.7%, mainly due to the changes in the energy price cap.
Last October the energy price cap was increased by 25%, which has so far added about 0.9% to the YoY figure, which of course won’t be included in future YoY figures.
Added to that, the ofgem price cap was reduced by 7% last month which is expected to knock another 0.3% off the headline inflation rate.
A few days ago, Kantar also reported that food inflation has dropped below 10% for the first time since July 2022.
The last time there was a big drop in inflation was in July, when all housebuilders shot up by around 10% on the day of the announcement, so it should be a good week.
Hold on to you hats!
Crossley,
The trading updates put out by PSN and TW this week were well received by the market. The reason Redrows wasn’t quite so well received was that the figures weren’t quite as good as the FY2023 figures it was compared against, which were exceptionally good considering the market conditions, and beat all analyst expectations at the time.
Crest has already prepared the market for the worst, hence the share price is on its a*se. This phase will pass, and I’ve no doubts this share price will rerate back to around £3-£4 by the end of next year. Mortgage rates are reducing, wages increases now higher than inflation, and both parties will be keen to win votes so we could well see the promise of a return of help to buy or something similar.
The budget is the week after the inflation data, so a lot to look forward to in the next couple of weeks.