Member Info for TheTrotsky

Citra Living, working in partnership with housebuilders, is intendng to acquire build-ro-rent, quality, affordable homes; so it should benefit from both income and capital appreciation.

Government policy since the 2008 financial crisis has been based around trying to peg back property inflation (by increasing stamp duty and removing tax incentives for private landlords) and avoid, it at all possible, a property crash; the aim being to allow wage inflation to overtake property inflation (and thus make property more affordable in the longer term). It is however highly debatable whether the government's actions to date are achieving its objective; obviously lockdown initiatives haven't helped and it's questionable whether removing tax incentives for private landlords has been somewhat defeated by the larger private landlords incorporating. The reality is, if the government really does want to achieve it's long-term objective then it's going to have to bite the bullet and either reduce the interest deduction for corporate landlords and/or increase corporate tax on corporate rental income. Just over 20 years ago, Gordon Brown finally abolished MIRAS on the grounds that it was costing the government a huge amounts of money and also distorting the housing market (by lowering borrowing costs and enabling private buyers to pay more for property, thus fueling property inflation). The government now has to remove any remaining distortions. This may impact Citra Living initially but should reduce the off-plan cost (in real terms) of new housing in the longer term.

With cash of circa $280m+ and an annual cash burn rate of between $15m and $20m it ain't going to disappear any time soon.

I'm jeff'd if I know! I thought that companies were supposed to release news thru RNS, not tweets, but what do I know. TBH I can't see anything on JB's twitter account that would constitute (new) news. I think I'll just sit back and enjoy the ride until things become a bit clearer ;-)

Thought it might be useful to compute some estimated FY22 figures to put today's RNS in context.

Assuming:

1) No increase in sales between FY21 and FY22;
2) A gross margin of 44% (in line with FY20 and reflecting increased supply chain costs); and
3) A conservative £10m increase in underlying costs (to allow for increased marketing costs and time lag on FTE costs)

I'd estimate that FY22 EBITDA would be approximately £18m (FY21: £40m; FY20: £26m) and FY22 operating profit (assuming no change in depreciation and/or share-based payments) would be approximately £7m (FY21: £20m; FY20: £24m).

If we focus on EBITDA, then I estimate that FY22 sales would need to increase to at least £318m if you wanted to achieve the same level of EBITDA as FY21 and that assumes underlying costs are at ,or around, £100m.

Given the relatively soft comparables in H2 FY21, I think there may be some scope to increase sales in H2 FY22 but that they are going to struggle to increase H1 FY22 sales against strong comparables in in H1 FY21 (especially given that the first two months of H1 FY22 are broadly in line with H1 FY21). Bottom line, it would currently seem unlikely that FY22 sales are going to exceed £290m (even allowing for an improved H2) with a corresponding EBITDA of approximately £28m (a £12m decline) without either a major shift change in their market or their marketing drive delivering a larger share of business from their competitors.

I guess that their decision to absorb supply chain price increases is in line with their competitors but it's quite clear that, although sustainable in the short/medium term, it will have a significant impact on their results (and share price) unless they are able to significantly improve their top line to compensate.

I've always intepreted the term "selling off" as reducing one's position not increasing it and therein lay my confusion with your original statement. However, I accept that in the context of shorters that it can be interpreted as increasing their position; it's just not the term I would have used.

The reference to "selling off" (as if they were disposing of their positions in response to yesterday's rise) is, in this context is, I would suggest, confusing. If you'd said that they were increasing their short position (which I now take that you are implying) then the statement would, I suggest, make more sense. Anyway, therein lies my confusion with your statement.

I beg to differ:

"... I think its more likely Jupiter Fund via their short or those that had borrowed stock selling off in response to the large 4.7% rise yesterday ..."

I don't follow your logic. If Jupiter Fund was trying to close out its short, as you seem to be suggesting, then they'd be buying not selling. A share price fall would be more indicative of shorters doubling down.

The dividend is paid net of (irrecoverable) US WHT at 15% in ISAs and share trading accounts. However, under the terms of the double tax treaty, the dividend is paid gross, without the deduction of US WHT, to pension funds, SIPPs etc.

I think the issue here is whether JIM can maintain and/or increase its current dividend payments in the face of an anticipated, but as yet unconfirmed, decline in investor trading activity (in common with other brokers) as more people come off furlough and return to work. Obviously, if JIM can add more traders to its platform it may be able to offset the impact of investors trading less frequently. It is however all ifs and buts and, until there's another trading update, people are being cautious. IMO the current market value does not reflect the current expected yield and if JIM is obliged to reduce its quarterly dividends (its stepped them up its dividend payments as earnings have increased and its probable that they will step them down if earnings start to fall; JIM prides itself on tight fiscal control) then I don't think the share price should fall much further (assuming the price is aligned with the adjusted yield). Obviously, JIM has some cash reserves and could still maintain its current dividend for a couple of quarters if any decline in revenues is expected to be reversed in the short term.