RE: Battersea watch...30 Mar 2025 22:03
Hi James, Your caution is entirely understandable, especially given the scars left by Carillion and Laing. But I’d argue that Vistry’s approach, while superficially similar, is structurally quite different. Unlike the old contracting models that relied on wafer-thin margins and ballooning fixed-cost risk, Vistry’s Partnerships model is asset-backed, volume-driven, and underpinned by long-term funding agreements with housing associations, local authorities, and institutional PRS players.
It’s not pure public sector contracting—it’s de-risked forward-funded development, often on deferred land terms, with visibility on cash flows and capital returns. Yes, margins are lower than Open-Market sales, but the capital intensity is also lower, and the return on capital employed (targeting 40%) is what really matters in this setup.
As for the buyback — I agree, the timing was questionable given the South Division issues — but with the cleanup complete, net debt falling, and a £4.4bn order book, there’s a path to stabilisation and growth that isn’t necessarily being priced in. It may not be the highest-quality name in the sector, but in a market rotating toward income visibility and strategic housing delivery, there could be method in the madness. IMOO DYOR