Hardcore Uproar
19 Nov 2015
Re: Strong Update - Price crash You expect profit taking around results day but 10%, that is a bit strange, something has really frightened somewhere. Take note of the Taffy, comment on the Barratts board, this could be very significant . How dependent are builders on house price inflation, let alone house price deflation?
Nickname already in use
19 Nov 2015
Re: Strong Update - Price crash I've been in and out of Bovis for a while, but today went heavy on these. These large swings are always overdone (I hope) and within a few days all will be normal again and hopefully we can trouser a nice profit.
Eadwig
19 Nov 2015
Strong Update - Price crash Typical of builders, you release a strong trading update and the market hammers you.Down >10% early on, I have doubled my holding at @888p. Must be a great buying opportunity, surely?Not the best of builders, no doubt, but compare expectations, P/E now and going forward and yield with other FTSE companies, and it seems like a no brainer.I think the reaction has been particularly bad on release of the US Fed minutes yesterday indicating a rate rise in December. Everyone believes the Fed must raise first then the Bank of England will follow. Personally I don't think it is so cut and dried.
Eadwig
06 Nov 2015
Re: Rigged deck A few days ago a spokesman for the larger builders had it put to him that builders should be increasing their output and were happy to restrict supply in order to maintain prices.His response was excellent, citing the usual lack or skills, shortage of bricks, slowness of planning in the UK etc, but he also added a new stat that I hadn't heard before. He said output by the large builders was up around record levels, but historically they had only ever accounted for about 50% of new build, with 15,000 smaller companies making up the other half. Of those 15,000 smaller builders, less than 5000 survived the 2008/9 crisis, thus leaving a hole that the larger builders cannot plug - without weakening balance sheets, taking on debt and significant risk - exactly what they are NOT about to do after learning from the credit crunch.
binjiou
06 Nov 2015
Rigged deck The rigged deck that the property market has increasingly become is ignoring the huge pent up " latent " demand for "affordable" housing. This demand is not going to be satisfied until builders significantly increase their output . Hitherto, it has paid them not to do so. They have benefited by restricting supply, which ,in this property obsessed society, leads to prices being far too high in relation to average earnings. This needs to change. A building boom could be arguably fuelled by more affordable prices; builders would then benefit from economies of scale, and profit accordingly. Lower prices should not necessarily mean lower profits .Government needs to promote the building of truly affordable energy efficient housing , and stop getting first time buyers into debt at the wrong price, thereby propping up prices.High house prices mean that most people have little or no disposable income after paying for and maintaining the roof over their head: not good in a consumer society like the UK
valuemanbuyer
05 Nov 2015
Re: tumbling share price Reason for drop is Liberum sell note on all house builders - think there will be cost pressure next year and therefore limited upside as values are at record prices to assets.I think they're wrong and next year will be good .- especially at Bovids who will be building on cheaper land and have much higher returns .the upside case here is unique versus sector but has been dragged down .buying opp !
Merlindale
04 Nov 2015
Re: tumbling share price wish I knew....there is no corporate news that I have seen and six analysts since June have target prices ranging from 1075 up to 1505p from the mighty Goldman Sachs! Digitallook show its forecast to be on a prospective PE of 8.5 and yield of 4.6% for 2016 - seems pretty good to me - maybe we should top up at these bargain basement prices.
moorlaner
04 Nov 2015
tumbling share price does anyone have any views on what is going on here?
Eadwig
17 Sep 2015
BUY FTSE 100 builders I don't often quote Motley Fool articles, but those with well researched figures are worthwhile in helping to cut through the doom-mongers BS. As ever, I only recommend buying on a strong, market-wide pullback (Ie. not one driven by a problem with the actual stock or sector. Obvious, but worth pointing out). The next big pullback could be today on news from the Fed."If you want a sector that has provided great riches for investors since the financial crunch, look no further than the FTSE 100's housebuilders.This week, Barratt Developments (LSE:BDEV) reported a 44.8% rise in pre-tax profit for the year to June, after its total completions count rose by 10.8% with an average selling price gain of 8.7%. The cash is rolling in, and the firm managed a cash return of 25.1p per share (including an ordinary dividend of 15.1p plus a special 10p), for a total yield of 3.8% on today's 651p share price.And that share price, well, it's climbed by 74% in the past 12 months and has six-bagged over five years.Big cash handoutsPersimmon (LSE
SN) hasn't managed quite the same share price rise, but it's not far off -- it's up only 58% in a year, to 2,090p, and up five-fold in five years. But in the first half of the current year the company saw pre-tax profit rise by 31% with a 7% rise in completions and a 4% bump in average selling prices.On top of that, Persimmon has handed back special cash payments of 75p per share in 2013, 70p in 2014, and 95p this year, pushing the total return closer to Barratt's big sixer.Finally, Bovis Homes (LSE:BVS) hasn't actually come close to the other two in share price performance, but its 188% gain over five years to 1,084p is still something that would put most sectors to shame -- the FTSE 100 has managed a pathetic 12% over the same period.And Bovis has brought home double-digit EPS rises for years now, and though the first half this year brought a relatively modest 9% rise in pre-tax profit after completions rose by just 2.6%, selling prices were 10% higher.After such magnificent share price gains, is the sector near the top and is it time to get out? I say a cautious No on both counts.Growth forecastsBovis is forecast to grow its earnings by nearly 30% this year and more than 20% in 2016, putting the shares on P/E ratios of just 11 and 9 respectively (with the long-term FTSE 100 P/E around 14). Dividends, which should be very well covered, are expected to provide yields of 3.7% this year and 4.3% next.Persimmon shares are slightly fuller valued on a multiple of just under 14 for this year, dropping to around 12.5, on EPS growth forecasts of 24% and 11%. But the expected dividends are higher, yielding 4.8% and 5.4%, as the firm's cash return plans continue.And at Barratt we're looking at a mooted 16% rise in 2016, for a P/E of 12.5 and with a 4.7% dividend yield on the cards.What are the risks?Now, as with anything related to house prices, there's certainly some cyclical risk with these three stocks, and there have been periods of low P/E valuations in the past. But the housing market seems to be stabilising, with predictions of rises of around 6% per year in the coming 12 months -- and we're in a period of improving economic outlook.A rise in interest rates when it happens could slow house prices and hurt housebuilder shares too, but even if house prices remained static for a few years (which seems unlikely), the housebuilders still look to be on attractive valuations to me."
psmith64
01 Sep 2015
Positive sector news............... Private sector registrations rise 13% - NHBC Private sector registrations for new homes rose 13% in the rolling quarter of May to July 2015 against the comparable period last year, the latest figures from NHBC show.During the May to July period, 32,521 private new homes were registered. Meanwhile, the public sector continued its resurgence, with the number of new homes here rising 17% during the three month period to 11,163 against the same period in 2014. NHBC said that the rise in public sector registrations was “further evidence of noticeable growth as a result of changes to, and the extension of, the Affordable Homes programme”.NHBC added that overall registrations were continuing to outperform 2014 levels. In total during the May to July period, registrations rose 14% against last year.In July alone, private sector registrations rose to 11,270 from the 10,389 of July 2014. Public sector registrations also increased to 3,606 from 2,931 last year, with total registrations for the month lifting 12%.NHBC’s chief executive Mike Quinton, said: ““Following the strong growth we reported in our quarterly statistics, it is pleasing to see this progress continue into the second half of 2015. However, as we have continually stressed since housing output began to increase two years ago, the UK is still building way below the volumes of homes that we desperately need.”For all the latest housebuilding news and events visit www.house-builder.co.uk
Source
18 Aug 2015
Re: Interest Rates Thanks for the link psmith64!Regards,Source
Source
18 Aug 2015
Re: H1 Results Summary Good Summary Eadwig, and seems t reflect my view also.Thing they may suffer in the short term though for is relatively pedestrian plodding progress though...Regards,Source
Source
18 Aug 2015
Re: Another H1 Summary That about sums it up!
Eadwig
18 Aug 2015
Another H1 Summary Shares of British housebuilder Bovis Homes Group Plc fell off 7-year highs on Monday as the company’s in-line first-half results failed to impress the market at times of a continued shortage of housing supply.The strong UK housing market helped Bovis generate a pre-tax profit of £53.8 million in the six months ended June, 9% higher than the same period a year earlier, on the back of a 9% jump in revenue to £350.7 million. Operating profit was up 6% at £54.3 million.The company said it achieved a record number of legal completions at 1 525 homes during the period, up from 1 487 during the first half of 2014, with the average sales price of its homes rising 10% to £264 200 from £239 500 a year earlier.Bovis has stepped up its land purchases with planning permissions for 19 081 homes at 135 sites, up 5.6% from 18 062 homes at 128 sites during the same period last year. It added that it is on track to deliver the expected volume of new homes for the full year and intends to pay a dividend of 40 pence per share, up from 35 pence a year earlier.“Significant land opportunities continue to be available at higher returns meaning disciplined investment in consented land should underpin future growth in shareholder returns,” said Chief Executive David Ritchie. “The combination of strong revenue growth and higher profit margins with improved capital efficiency will drive higher capital turn and return on capital employed.”Mr Ritchie said recently relaxed planning laws had helped the industry to get hold of land, but that it faced a challenge in finding builders. A survey by the Royal Institution of Chartered Surveyors showed last week that the number of homes for sale had sunk to a record low, which would likely result in significant price gains, and accused the government of stimulating demand through its housing initiatives while failing to address the issue of supply.Shares were 3.93% lower at GBX 1 153.85 at 09:41 GMT in London, marking a year-on-year increase of 43.96%. The builder is valued at £1.61 billion. According to the Financial Times, the 12 analysts offering 12-month price targets for Bovis Homes Group Plc have a median target of GBX 1 162, with a high estimate of GBX 1 450 and a low estimate of GBX 880.00. The median estimate represents a 3.25% decrease from the previous close of GBX 1 201.
Eadwig
18 Aug 2015
Re: H1 Results Summary " I wouldn't say that a 9% increase in turnover and net profit is amazing,"I think this is the key to the drop in sp. Analysts have become used to UK builders routinely shooting the lights out, whereas single figure growth, which might be fantastic in other sectors, fails to impress. I think the average sale price at 264k, 10x the average UK salary, may have scared some people off on a day when another BofE director was warning against interest rates remaining low, like that is a bad thing.So what do you do? Take your profits and look for a house builder with better returns? If you look at P/E and PEG ratios, Bovis still represents value, and the divi IS better than many and their growth plans are ambitious while still raising shareholder returns. They certainly remain part of my UK housing sector investments for the next 6-30 months - depending on how the market reacts to the first interest rate rise.
