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Steve, the bottom last month was briefly 168, and 170. I got in at 172 because that was the bottom in October 2022. Shares have a habit from bouncing from previous lows. Anyway, I’m in at 50% of book value so no concerns to hold long term. Just shows how low PSN could go though. Don’t think just because it’s slightly under book just now that it won’t go any lower…

Steve, you really do talk some Sh*te.

There’s not a single housebuilder in the land with a 50% NAV that could possibly go bust, unless it was so highly leveraged that a slight drop in house prices wiped out the equity.

For the record, I’m not underwater in CRST, I’m in profit having gone in big at 172. But yes, I did take a loss on PSN having sold just below £12.

The Share price would need to drop to about £5.50 to be as good value as Crest Nicholson in terms to price to book value.

Although, as strictly bricks has pointed out PSN has better return on equity so £7 would put it on a par with crest in terms of value.

Strictly,

But, as CRST is trading at almost half the equity on the balance sheet, then the return on market cap would be double the return on equity, so can’t we accept a “poorer” return on equity for CRST, being as half that equity was free anyway?

I hope I’m making sense, but I would only look at return on the equity I’ve paid for rather that the equity I got for free when I bought my shares.

Enjoy your pie.

Strictly

I always find your posts interesting and informative, but I’m a numbers guy.

What numbers specifically suggest BWY has superior performance?

Strictly,

I get what you’re saying, but then I think about what happens when times get sticky (as they are) and those expectations aren’t met? That’s why for me strength in balance sheet is key.

I guess we’ll see a TU from BWY in the next couple of weeks? It will almost certainly reflect the tone of CRST. Is that not of concern to you, particularly when there’s an expectation of superior performance, priced in to make up for the weaker PBV?

CRST is projecting £50m profit against a £436m market cap, giving a trough p/e of 8.7. Not too shabby really all things considered.

To be comparable to that, BWY would need to be projecting £280m against its £2.44b market cap, or if you factor in that the PBV is approx 40% higher, then BWY would need to be projecting £392m profit to justify its higher valuation (against its PBV). Let’s be honest here, it’s not going to happen. Which would suggest a bigger SP clobbering that CRST had.

Note, all figures are taken from Yahoo finance so I’m not sure if they reflect todays rise in SP for both companies.

Strictly,

A few points I find with BWY:

Currently trading at a 27% premium to last September (CRST is still trading similar to the lows of the same period). That worries me in these uncertain times because I always think it could revisit previous lows, just as CRST did when the TU came out last week. One would expect all HB’s face the same market conditions, so their TU will likely have a similar effect on SP, whereas with CRST, the worst is (more than) priced in.

Moving forward, I can’t really compare profitability because BWY hasn’t given a recent trading update, although as I say, one would expect it to be of a similar tone to that delivered by CRST.

PBV as of today for CRST 0.54x vs 0.72x for BWY

As far as I’m aware, CRST is the only HB institutions are buying of late looking at the RNS’s which is rather telling.

Personally, I’m looking to sell out of CRST when it’s trading closer to its rivals in (PBV terms) at 0.75x, which would be £2.56 SP, although I’ll probably set my holdings to sell out just below £2.50.

Look forward to hearing your views…

Source: https://www.sharecast.com/amp/news/broker-recommendations/berenberg-on-crest-nicholson--14529798.html

Shares in Crest Nicholson were performing strongly on Tuesday as the housebuilder attempts to recover after a profit warning last week which tanked the stock price, with broker Berenberg lifting sentiment after reiterating its 'buy' rating.

The broker pointed out that the stock is trading at just 12x trough EPS, and 0.5x tangible net asset value.

"This leaves the group, even on significantly downgraded forecasts, as the most lowly rated housebuilder in the peer group, and we think this asset-backed valuation is very compelling," said analyst Harry Goad.

"It is on account of this valuation support that we keep our 'buy' rating."

In an unscheduled trading update on 21 August, Crest Nicholson said it had seen a marked deterioration in sales rates over the past seven weeks, with 0.25 houses sold per site per week, down from 0.5 a year earlier.

Profit before tax is now expected to come in at £50m for the financial year ending 31 October, a 30% cut on previous guidance and down from £138m the previous year.

The downgrade to forecasts means Berenberg has cut its target price from 310p to 250p.

"While we acknowledge the company’s comment that higher mortgage rates have affected customer demand, we are nevertheless surprised by the extent of the change in outlook and guidance, which stands out as more marked than peers," Goad said.

"With hindsight it appears the management assumptions for what it could achieve in its H2 were far too optimistic."

“Crest could liquidate the entire company tomorrow as far as I’m concerned providing they could get at least book for it, and hand out the dosh as a final div to the investors next week”

Strictly, you got that bang on there. This is why CRST is my only house builder share. It’s got to be a takeover target from one of the bigger HB’s.

PSN (and a few other of the bigger HB’s) could buy CRST out at a 50% premium over the current SP and still get a 25% discount on the book value of its assets.

I’m curious to know why you see BWY worthy of a bigger investment that CRST?

I’ve been saying this for a while and it seems the experts are in agreement:

Berenberg on Tuesday said it retains its 'buy' rating on Crest Nicholson as despite the "disappointment" of a large profit warning from the housebuilder, it still thinks the group's "asset-backed valuation" is the "most compelling" in the sector.

CRST Current PBV is 0.5x vs PSN’s Current PBV of 0.94x

Dividend yield is better too.

Source: Yahoo finance

Manz, what’s a 7% divi when you can get 6% risk free without watching your capital diminish everyday?

Easy money here. Get in before America opens 🚀🚀

Boom Boom 🚀

How do you arrive at this conclusion?

The SP was up nearly 4% yesterday in anticipation of good results. The results were sh*te and so it dropped today.

Having bought in here at 103, and selling out today at 100, I have promised myself to never ever invest in this basket case again!! It’s always Jam tomorrow and excuses, but let’s gloss over it with a new name.

Next years results will no doubt be along the lines of “decent year was wiped out by rising finance costs which in turn also impairs goodwill further so it’s a loss, but hey don’t worry next year will be better”

Well yes, obviously it’s sub £1. The results were absolute garbage. Silly me for thinking this had turned a corner.

Https://www.thisismoney.co.uk/money/mortgageshome/article-12335339/amp/Mortgage-lenders-including-HSBC-start-cut-rates-inflation-falls.html

Https://stocks.apple.com/AfYrhs_vQTX2i_dXJgkcJzA

Inflation is what killed the SP here. That is now moving downwards, particularly in the countries in which MCG operates so we should see a reversal in SP.

Sell it and move on the manz. Nobody is forcing you to hold, or stick around here.

I think we’ll see over 120 this week.

Hopefully the results will follow FGP and get the new name some recognition.