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Afternoon Crossley,
When you say “long, long ago” I assume you mean about 3 months ago? Yes, I am a little stumped the crest share price is still down here, but when it jumps, it jumps big. The trading update next week, along with the inflation data should see it move up nicely. Long term, I still think crest has the furthest to bounce. It jumped about 150% from this level within about 18 months coming out of covid. The only other housebuilder to see anywhere near that return was Vistry, but that’s already about 35% up from the mini budget trough.
WT
You mention all these bankers; which ones are putting their money where their mouth is and buying some shares? I don’t see the CEO, or any of the bod for that matter, buying any shares.
The only professionals I see putting their money where their mouth is - the shorts.
The results suggest to me the contracts aren’t bring in any value, so how to value those contracts?
Strictly,
I’m surprised slow hasn’t piped up to call you a complete novice, followed by some pie in the sky theory about what might, or might not, happen in the future.
If it doesn’t pass the sniff test (PBV too high, too much leverage) then it’s best to just stick to what you know and move on.
Back to the house builders, I’m expecting the winning steak to continue into next week when inflation should come in sub 5%.
Hello again strictly,
Re: bvps
You prove the point I made a few posts down this thread that bvps means nothing in the financial industry because they’re all so highly leveraged.
Take the last lgen figures ending 2022 when the pbv wasn’t too shabby. £501b of liabilities against £513b assets. If those assets get impaired by just 2.4% the entire book value is wiped out.
So what do you assume to be a fair price for Phoenix , and how do you arrive at that number?
I’m not going to lower myself to start getting petty, and I’m not going to discuss how much I have invested- it’s irrelevant.
My first research is to always check pbv and profit on yahoo finance. If I don’t like it why bother going any further?
Mike, Steve
Well this aged like milk. Hope you’re not too down about missing out?
With regards to phoenix, I lm not interested im reading any updates. I don’t buy loss making companies, or anything trading over 0.75x book.
It may well be a good buy, but due to the above, it’s not something I’d personally be comfortable investing in.
slow,
i don’t go for the *** end approach- i.e i only buy solid, profitable companies on the cheap that the market has simply overlooked.
i have to admit, i don’t usually do stocks unless i feel like i’m getting a real bargain. such opportunities are few and far between and as such crest is the only stock i’m holding.
i bought the stock at half net tangible book value, with low debt, plenty of cash, high profits every year (relative to market cap), and a 10% dividend yield. what’s not to like?
when i can sell my holding at 0.75x book value (which will give me a 50% return) i’ll just sit on the cash until another bargain opportunity comes along.
Afternoon crossley,
Pbv means nothing in banking. They’re so highly leveraged that if just a small fraction of the loans go bad, the entire net asset valuation can be wiped out.
Just look at metro’s PBV.
Crests debt to assets is only 40%, so plenty of room for error.
Just had a look at Phoenix. Not sure where the value is there? Price to book is 1.45, made a big loss the previous 2 years.
I only buy stocks based on scrap value now- I.e net tangible asset, and would never pay more than 0.75x, just to give some tangible security to my investment, should all go tits up and it end in administration.
Panda,
If you think it’s crazy that the PSN share price is the same as 2013, what do you make of crests share price being 54% lower than 2013, and half its net tangible asset value?
“ so I expect a little more downside eventually”
So why do you continue to hold?
So glad I managed to get out of this in the 90’s.
Never agiain.
Steve,
I get the feeling you haven’t really grasped the fundamentals with PSN and compared how overpriced it is compared to other housebuilders. Compare its P/B and P/E with other housebuilders and this has further to fall than other housebuilders to find it’s fair value IMO.
Money line,
What makes you think there wouldn’t be a market to take crest over? BKG only operates in the south, where all of crests land bank is held. They have £1070 cash sitting on their balance sheet. Crest has £847m net tangible assets. BKG could offer a 50% premium on crest share price (£600m total) and still get all of crests land bank at a circa 30% discount.
Money line,
What struck me about this shared ownership scheme was that other housebuilders don’t seem to be offering it, and it’s not available on pre owned homes, which give crest a competitive advantage in a market where buyers are few and far between.
From the HB’s perspective it’s just as good as help to buy because it’s more affordable per month for a FTB, and the deposit is still 5% (10% of the 50% share).
The total monthly payments will be lower on this new scheme because they buyer is making payments on a 45% mortgage + 0.23% per month (2.75% p/a) on the rented 50% share. This will be cheaper per month than both traditional renting, and paying a regular mortgage, with or without HTB.
Porsche obviously doesn’t know how to read a balance sheet if he thinks there’s a chance of a rights issue for any of the house builders. If memory serves me well, only TW and BDEV had a rights issue in 2008. BDEV had around £6m in cash, and about £200m in short term debts. Long term debts also fell due and it simply didn’t have enough liquidity. That is not the case today.
Money line,
Re help to buy, Crest has just partnered with legal and general to launch its own scheme which is very similar help to buy.
https://www.warwickshireworld.com/lifestyle/homes-and-gardens/local-warwick-homebuyers-benefit-as-crest-nicholson-launches-new-shared-ownership-scheme-4383385
I bought 50,000 shares of Crest at 172, so I’m currently about 10% under water, but I’m not phased in the slightest.
I paid exactly half book value, so I’m happy with the price I paid. Sure, it would’ve been nice to get in cheaper but hey-ho, I’ll buy some more at a bigger discount. Now the market cap is sub £400m, with about £850m net tangible assets on the balance sheet, this will get a takeover bid I reckon, most likely from BKG- They’d be daft not to.
As I write, Crest Nicholson is trading at just under 50% of net tangible asset valuation! £876.6m of net assets, priced at £404m market cap…. Crazy!!
Even assuming worst case scenario:
Write the £29m intangible's off- leaves £847.6m net assets.
Inventories were sitting at £1108.1m on the latest 2023 balance sheet. So assuming worst case scenario, let’s say a write down of 20% due to market conditions- (£221.62m).
LEAVES £626m OF NET ASSETS (WORST CASE). That’s a 55% premium on current market cap!!
Being as Crests business is also predominantly in the south of England, it seems like a good opportunity for Berkeley to put a bid in to get the assets on the cheap. The latest accounts show it has £1070m of cash, so it’s well placed to put a bid in.
I’m not saying I’ve heard any rumours of this, just that it would be a great opportunity!
As I write, this is trading at just under 50% of net tangible asset valuation! £876.6m, of which £29m is intangible… priced at £404m market cap…. Crazy!!
Let’s assume worst case scenario:
Always write the intangible's off- leaves us with £847.6m net assets.
Inventories were sitting at £1108.1m on the latest 2023 balance sheet. Assuming worst case scenario, let’s say a write down of 20% due to market conditions- (£221.62m).
LEAVES US WITH £626m OF NET ASSETS (WORST CASE). That’s a 55% premium on current share price!!
The closest competitor to Crest is Berkeley group as it also operates predominantly in the south of England, which is where the vast majority of Crests land bank is held. Berkeley’s latest accounts show it has £1070m of cash sitting on its balance sheet so it would be a great opportunity for it to put a takeover bid in for Crest to get the assets on the cheap?
I’m not saying I’ve heard any rumours of this, just that it would be a great opportunity!