Member Info for strictlybricks

Cyber, Re Crest BVPS, I've got shareholders' equity �823.5m less goodwill �29.0m = �794.5m divided by shares in issue 256.91m = BVPS at end April 309.25p Whereas my projected Crest BVPS figure for end April, as of last night, had been 308.62p So an insignificant gap between those two figures of 0.24% Strictly

Cyber, My ten minute take on Crest's results (typing this with also an ear to the radio listening to what did or didn't happen in Singapore last night) were that they were pretty dull. But, perhaps more importantly, that they were dull in a positive sense in that there were no further shocks included - my estimated book value per share for end April for Crest was within a quarter of a percent of the actual figure given this morning (I now have 309.25p BVPS as at 30th April) and I've made no change to projected EPS, Furthermore, the declared div of 11.2p implies a likely total year div of 33.6p and that would be a 7.5% div yield on last night's price. And once the market stops fretting about the half year results, and it looks like it's not a very happy bunny this morning about them, it might start to pay more attention to that..? After all, bear in mind that, with regards to your poser about how long the market will hold Crest's disappointing recent update against them, well, they didn't take long to forget what a pile of p..p Bovis is, did they ? I mean, IMO, Bovis' share price is now significantly above where it should be in order to represent parity of value against the other big builders... Strictly

Terrace, I'm intending putting out a comment on the blog on the weekend to include this, but seemed very much like a Ronseal job to me - and TEF's 2018 performance thus far certainly puts you and Sain in pole position for any curries being bought this year... :-) Strictly

James, The trouble with Bovis, of course, is that the height they set the bar is more of a problem for limbo dancers than for high jumpers... Long term, they've lagged Bellway by an average 4% ROE... but last year, they lagged them by 14%...! I think their share price would have to pretty much halve against the others before I was interested - I really don't understand why it is where it is...? But there you go... Bellway have a trading update due 12th June.... I'm much more interested to see what that says...? Strictly

James, Re Galliford, it depends how far you trust their figures...? If you compare stated EPS for them against reality check EPS (by which I mean, the movement of BVPS from start to finish of the year adjusted for dividends paid), then Galliford's EPS has been overstated for the last six years in a row. The upshot is that total declared EPS for the six years were 470.7p, total reality check EPS 344.16p. Then take into account the high divs paid, total 293p, and this meant that, during that six years, there was a period where the overall BVPS fell - that was from 497p in 2014 to 480p in 2017. The upshot of all that is that firstly their share price performance over that time has been pants - 30% overall gain since start of 2013 compared to Redrow 321% - they also had to recently do a rights issue..! And yet the market is still giving them a PBV of 2.03 compared to Crest's lowly 1.42. So, in the world of likelihoods in which we live in this game, I reckon the market has probably significantly overdone it's recent price downgrade on Crest, and I'm imagining that at some point the builders will all have their margins drifting downwards because overall - with the exception of Bovis of Battersea Dogs Home, whom we don't talk about - the house builders are still earning significantly about their long term average margins and probably that can't continue for ever...? So I'm imagining that, at some point, the other builders are likely to follow where Crest are leading - but maybe not including Telford as not only are they now playing catch-up on margin over the next two years based on scribbler forecasts, they are also now in a different game to the others... Strictly

Thanks for that, 1GW, I couldn't find it because I was looking for it in the 2018 section, the date it was released, rather than in 2017, the year for which it applied... Duh..!!! Strictly

1GW, Re your recent comment: "On margin, in January they guided to "margins expected to moderate towards the middle of our 18-20% range" , mentioning hpi decreasing and cost pressure increasing. " Cyber and I have both unsuccessfully tried to find this in Crest's new releases and final accounts report, and you mentioned you've been to a couple of the AGMs - so was it a comment that was given out there or to analysts separately, that didn't make it into the published news feed...? It is, after all, quite a telling comment! Strictly

Cyber, Telford aren't really in the same boat, so Bellway's update, due 12th June, might be interesting.... then Bovis to follow on 5th July... If there's no hint of a wobble from either Bellway or Bovis, that surely suggests that this is more likely to be a Crest issue rather than a house builder issue...? Even if it is, as I've suggested elsewhere, Crest now looks to me to be currently best value by a small margin. Some patience is required here, I suspect? Strictly

Cyber, Telford aren't really in the same boat, so Bellway's update, due 12th June, might be interesting.... then Bovis to follow on 5th July... If there's no hint of a wobble from either Bellway or Bovis, that surely suggests that this is more likely to be a Crest issue rather than a house builder issue...? Even if it is, as I've suggested elsewhere, Crest now looks to me to be currently best value by a small margin. Some patience is required here, I suspect? Strictly

1GW, Cyber and I have been discussing this topic elsewhere, but your comment about the MD's response was interesting & useful - so thanks for posting it here... Strictly

Cyber, I hadn't seen this post you made at the time I emailed you yesterday evening..... Despite the very upbeat comments from Persimmon (and they're probably entitled to their positive approach... the team has survived last year's big bonus debacle and, as a company, they've been performing brilliantly - just that their price to book value is so high it terrifies me as an investor to engage with it), I think the first link you posted was an appropriate pause for thought... In line with our discussion, the house builders' long term average return on equity has been around 15% and, unless we think that "It's different this time" (reckoned to be the four most dangerous words in investing!), sure, at some point before too long, margins have to start slipping back down towards those levels...? In my own figures, I'm certainly working on the basis that that is going to happen... if I'm wrong, and it doesn't, well, not much to complain about there...? Of course, on the one hand, the housing market doesn't have a track record of managing this cycle process smoothly but, on the other, we now have a shed-load of government interference by way of house buyer support - to the extent that it may have painted itself into a corner...? They've just whacked the gambling industry by drastically cutting the betting stakes on machines right down, but I somehow imagine it'll be less straightforward weaning the nation as a whole off its new house, first time buyer financial fix... Separately, I look forward to your reply to my email last night... maybe we could transfer that discussion on to the blog..? Strictly

Steph, At the risk of committing investment heresy here on this hallowed share chat, given recent relative price movements (35% difference between the two over the past twelve months), have you considered Josh95's favourite share as an alternative...? I mean Crest, currently languishing at a PBV of 1.51, barely above Telford which is 1.49. Given that the scribblers have Crest down as currently earning at a rate of 22.8% compared to Telford's15.5%, this is a pretty big mis-pricing by the market IMO, making Crest a lot better value right now.... Even Bovis, of Battersea Dogs' Home, is on a PBV of 1.63. With an earnings rate of just 11.7%, the market is having a laugh on that one, surely..? Strictly

Sain & Cyber, Thanks, both of you... I think I'm going to allow myself to be influenced by the pair of you on this, and so I've upped my provisional first half figure to 40% of the 49p EPS I have them penciled in for for this year... So, that's about a 5p difference by end September, i.e. approaching 2% of book value by then - maybe enough such that, if I'm teetering on a trade decision, it might just tip the balance..? Strictly

Sain, Do you have any view yet on the likely EPS split between 1st half and 2nd half of the year...? Cyber and I have been discussing it separately by email... I've put them in for 30% first half as that was about the average of the three previous years before last year's somewhat lower h1 figure, whereas Cyber is concerned that might be a bit low... This is relevant to both of us now as, like me, Cyber is aiming to work to as accurate a current BVPS figure as he reasonably can do in order to better evaluate trading opportunities between different builders' shares. Your thoughts would be appreciated... regards, Strictly

PPS, Coincidentally, Crest got a plug in the Telegraph today: https://www.telegraph.co.uk/investing/shares/questor-stock-market-storm-income-stocks-buy/?li_source=LI&li_medium=li-recommendation-widget

PS As a postscript to my minor rant about relative value in my previous post below, the Battersea Dogs Home of builders, aka Bovis, is currently sitting at a PBV of 1.57 as of close of play tonight, compared with Crest at 1.56. Crest's current return on equity is around 24%, whereas Bovis is around just half of that.....! Funny old world, isn't it..? Strictly

Steph, You sound a tad downbeat there, whereas Telford have actually made a cracking start to the year in terms of share price performance against the other builders worth considering - by which I mean, Bellway, Crest and Redrow - and I would say that has brought Telford up to being fully valued against those three even if none of them is anywhere near being fully valued against cash...? In fact, I suspect there may be a bit of schadenfreude for some on this blog in respect of the year's comparative performance so far.... I'm aware that one or two other commentators here in the past - people who clearly aren't Telford fans - have rattled the Musketeers' cages with negative comments about Telford as compared to Redrow and Crest (people don't tend to comment about Bellway - they mostly slip in below the radar...) - and both these companies have had a significantly less auspicious start to the year. Having said that, they're all now pretty much on a par value for money-wise - so let's see what happens from here..? But, wherever they go price-wise now, IMO, they're all head and shoulders above the other main players in the sector when it comes to value. Particularly Taylor Wimps, as evidenced in their rather dull trading update today. Most of their earnings being paid out in divs in a "Me too" program of so-called "returning cash to shareholders" means minimal future growth ambitions - and that showed big time in the numbers today... But most of the folks on the Taylor Wimps share chat seem okay with it - so we don't all see it the same way, I guess...? Strictly

Cyber, So, I think you've just underlined my point then...? :-) Strictly

Cyber, There you go then.... don't rely on the scribblers..! As you know, you can get the updated BVPSs from the blog, and they're mostly within 2% of the true figure when the accounts are finally issued by the companies themselves, so it's pretty straightforward for you to always have a pretty accurate current PBV available to you... As we've discussed elsewhere, if someone putting out PBVs is using start of year book values, they could be 15 months out by the time the accounts are issued... And, taking a company like Redrow, making a 25% ROE, just think how wrong their figure is going to be the day before the figures are out..? And that's one of the easy questions on the exam paper - so if people can't be arsed to get that bit right, well, what can you say..? Strictly

Cyber, I'm not entirely sure what you're asking me there..? If you mean current PBV based on assessed, up to date book values, then I have Telford 1.44 against Redrow 1.57 and Bellway 1.61. In terms of perceived value, I now have Telford a tad behind Redrow, Crest and Bellway. This, as you know, is down to the lower weighting given the significantly lower return on equity for Telford against the others. But then you have to also remember that Telford have made a much better start to the year than the others... with div reinvested, they're 7.3% up compared to Bellway, Crest and Redrow respectively being 6.8%, 5.2% and 6.4% down. That's quite a difference - and no doubt warms the cockles of the exclusively TEF crew here...! So anyway, I've adjusted my holdings accordingly, given some substantial return trip trades gaps had opened up on Bellway to Telford purchases made last autumn. And I've tweaked my provisional EPS for 2018 for Telford up a whole shiny penny following the trading update - from 48p to 49p. I didn't adjust 2019 and 2020 - these are still in for 57p and 64p, and thereafter have allowed for 10% EPS growth a year going forwards. That's giving a return on equity of 18.1% for 2018, rising to just under 19% 2019 and fading back towards 17% thereafter. The point, as ever, is that these estimates will very likely be more and more wrong the further into the future I try to peer, but my process of assessing a value and allocating a resultant share weighting, as you know, requires me to give this my reasonable best shot. And, only my second month in of using it, I'm still finding the mark 4 spreadsheet good to use - but no doubt we could chat separately about that on the blog at some point...? Strictly