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Wilko, Glynwebb, they all go the same way. I guess they back themselves into a corner by focussing on value and working on wafer thin margins. Meanwhile, the Range, which isn’t particularly cheap seems to be doing ok.

I doubt they’ll still be paying a dividend when they’ve made a loss this year. That’s probably why the shorts are still here.

Short interest on crest has just increased to 1.2%

Waste of time reading the trading update. This was the new CEO’s opportunity to set out his turnaround plan and restore trust and confidence in the company, but no meat on the bone. Add to that inflation higher than expected. Shorts will probably reopen their positions today ☹️

I hope you’re right Bob, but it’s too early to say. I thought we’d seen the bottom when it bounced at 176, and still have the lost fingers to show for it. Give it a couple of days to make sure.

No resistance at 152 and now making new lows. I can’t remember the last time the didn’t finish in the red. Belllway not coming back, and the silence about why the deal didn’t go ahead is deafening. I’m braced for more rectification claims, and “exceptional items”.

Anyone know why gleeson shares are down over 5% today?

I’m confident long term, but short term I think it will retest 152. They were forecasting £45-50m profit last time it hit 152. Now they’re forecasting £22-29m, which will be a loss with exceptional items, plus there’s the uncertainty why the Bellway deal didn’t go through.

Ok, so they decided it wasn’t worth £720m. That’s no justification for it to be priced at £420m today.

We’ve discussed possible reasons the merger didn’t go ahead earlier on in this thread, so all I will just summarise. Because this was an offer of shares rather than cash, due diligence had to be done by both sides, and Bellway shares would’ve had a lower implied value due to the poor results that were about to be announced. Just because the deal didn’t proceed at £720m, it doesn’t mean it’s not an absolute bargain at £420m (current Mcap).

Kyusho, I don’t disagree with anything that you say, but there does come a point where the market falls too far. Bellway walked away at £720m, but we’re obviously still trying to negotiate a price reduction, hence the extension request to make a firm offer. They probably would’ve gone ahead at £600m- that’s nearly 50% higher than the current share price.

It’s also important to note Peter trustcott had similarly poor performance at Galliford try, with its share price dropping from the moment he took up the post, to then beginning its climb of over 500% when he left in 2019. Meanwhile the new CEO was a top director at persimmon when they were the best performing housebuilder.

There’s only so low a company with £803m net tangible assets can trade at. It’s currently trading at £420m. Absolutely crazy.

Even taking into account additional cladding costs that may crop up, the underlying company is worth at least £650m based on its net asset valuation alone.

Interesting that Berkeley group has accepted responsibility to fix cladding on 820 buildings, yet only has provision for £140m. Seems far too low.

Rumour has it Bellway pulled out of buying crest Nicholson due to fears their £145m provision for 290 buildings was too low.

https://www.gov.uk/government/publications/building-safety-remediation-monthly-data-release-august-2024/developer-remediation-contract-data-release-july-2024

Denny,

Step back from all the noise and tell me what is really wrong with the economy at the moment? The press are Tory supporters, so they will of course like to create a sense of panic over the first Labour budget.

Inflation is back below target for the first time in 3 years, meaning interest rates are forced to come down, which will stimulate the economy.

Employer NI contributions have risen less than 2 percentage points. Gilts are up about 0.3%. It’s really not worth worrying about. Interest rates will be cut tomorrow, and the mood will probably change again.

Crossley,

The markets are always forward looking. The thing is we never really know what is just around the corner. When the waters look safe, stock prices are high, so it’s not the time to be buying. Buy from the pessimist , wait for all the hysteria to blow over, and then sell to an optimist. It’s the only way to win in this game.

Afternoon Crossley,

Yep, it’s been a while, is strictly still around? I sold my Crest Nicholson shares in January for a 38% profit, never expected to get a second bite of the cherry. TBH, I’ve not looked too closely at PSN, due to the high price to book, and it’s still trading relatively high compared to this time last year. But this is where the general housebuilders chat seems to be.

Interesting that Crest Nicholson has accepted responsibility for 290 buildings under the developer remediation contract, for which it has a £145m provision- and the market worried this is too low.

Meanwhile, Berkeley group has accepted responsibility for 820 buildings, yet only has provision for £140m.

Even more interesting is Berkeley is currently trading at 1.24x book value, while crest trades at a ludicrous 0.52x book value.

https://www.gov.uk/government/publications/building-safety-remediation-monthly-data-release-august-2024/developer-remediation-contract-data-release-july-2024

Yes, the CEO hasn’t exactly covered himself in glory. But most importantly sales are picking up, and will continue to do so as movers look to beat the stamp duty deadline, and mortgage rates fall.

Persimmon is the most overvalued housebuilder in terms of price to book because it has historically delivered superior returns when Jeff was in charge. I just wonder whether this CEO can continue to deliver superior returns to justify the relatively high valuation.

It seems to have bounced.

Anybody know what happened with Ashtead this morning?

What’s everyone stressing about really? I think some folk were having flashbacks to the Liz truss budget. Gilts are up 0.25%, hardly worth worrying about. The OBR expects house prices to rise a little faster. More importantly inflation is back below target, interest rates will be cut on Thursday and we’ll all be singing from a different song sheet. The market is so fickle.