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sancho panza

Crest Nicholson issues profit warning as house sales in London slow

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Explaining why housebuilders getting pummelled today

https://www.investing.com/indices/household-goods-components

FTSE 350 Household Goods Components

 PricePerformanceTechnicalFundamental
 
  Name Last High Low Chg. Chg. % Vol. Time  
  Barratt Developments 511.80 516.80 502.80 -2.20 -0.43% 2.59M 08:45:03  
  Bellway 2,878.00 2,912.00 2,836.00 -29.00 -1.00% 180.28K 08:44:29  
  Berkeley Group 3,306.00 3,337.00 3,281.00 -94.00 -2.77% 300.14K 08:45:07  
  Bovis Homes 1,002.50 1,006.50 988.60 -5.50 -0.55% 208.73K 08:43:45  
  Countryside Properties 286.00 286.40 277.80 +3.40 +1.20% 1.27M 08:44:00  
  Crest Nicholson 308.20 313.60 275.00 -14.80 -4.58% 4.37M 08:45:00  
  Galliford Try 903.00 916.00 894.00 -15.50 -1.69% 108.23K 08:44:00  
  McCarthy & Stone PLC 134.80 136.50 133.90 -0.10 -0.07% 264.07K 08:43:18  
  Persimmon 2,221.00 2,258.00 2,197.00 -38.00 -1.68% 422.44K 08:44:29  
  Reckitt Benckiser 6,500.00 6,633.00 6,426.00 -112.00 -1.69% 428.76K 08:44:24  
  Redrow 536.00 560.00 533.00 -13.50 -2.46% 291.54K 08:42:37  
  Taylor Wimpey 157.83 160.13 156.82 -2.23 -1.39% 1.62M 08:43:52  

 

https://www.theguardian.com/business/2018/oct/17/crest-nicholson-issues-profit-warning-as-houses-sales-in-london-slow-brexit

'The housebuilder Crest Nicholson has warned that profits will be lower than expected because of slowing sales in London and the south-east, where Brexit uncertainties are putting off buyers in the traditionally strong autumn selling season.

The company said it had not seen the pick-up in demand, with prospective buyers unable to afford a home in the most expensive areas and unwilling to make major spending decisions at a time of heightened political and economic uncertainty.

Crest Nicholson expects pre-tax profits between £170m and £190m in the year to 31 October, lower than the £205m it forecasted in June, and the £207m it achieved in the previous financial year.

 

“The usual autumn pick-up in sales volumes has not been evident during September and October, with many customers putting off decisions to buy while current political and economic uncertainties persist,” said Stephen Stone, the company’s executive chairman.

Shares in the FTSE 25o firm fell 7% after it said demand for pricier homes above £600,000 had been weaker than expected, with “more aspirational” properties struggling to sell as confidence wanes among discretionary buyers. Shares in other quoted builders, including Berkeley and Persimmon, fell too.

Crest Nicholson has dropped its prices in the most expensive locations of London where affordability is most stretched.

Demand has fallen so sharply that the company has closed its office in London and its remaining sites in the capital are being managed from its offices based in the home counties.

Its fortunes contrasted with the nationwide housebuilder Barratt Developments, which reported a strong start to its financial year in an update before its annual shareholder meeting in London on Wednesday.

 

“The group has started the new financial year in a strong position, with a good sales rate, healthy forward order book and customer demand supported by an attractive lending environment,” David Thomas, Barratt’s chief executive, said.

Barratt’s forward sales are up 12.4% compared with the same point last year.'

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13 hours ago, Bod said:

What's going on? They have 257 million shares,  a land bank valued at least $5billion, and a dividend of 11%. What's the catch?

https://www.bloomberg.com/quote/CRST:LN

https://www.crestnicholson.com/about-us/integrating-sustainability/our-data

House prices are falling and sales volumes are stagnating. It’s a question of how much further prices will fall and how much of an impact it will have on their sales.

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That's not the explanation. If there is a crash and they are liquidated, and their landbank falls to 1/3 of its current valuation, then that is still £6.50 per share, but the current share price is £3.00. I bet they leveraged themselves to fill the landbank, and they have enormous amounts of debt that will be called in.

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1 hour ago, Bod said:

That's not the explanation. If there is a crash and they are liquidated, and their landbank falls to 1/3 of its current valuation, then that is still £6.50 per share, but the current share price is £3.00. I bet they leveraged themselves to fill the landbank, and they have enormous amounts of debt that will be called in.

Land moves at 3 x the rate of change of house prices.In the SE where they operate,it's safe to say there's an amount of hopium in the asset pricing.Current shareholder equity running at £817mn .The debts won't shrink in a downtrun the assets will.

817 mn/257mn= about £3.2 per share.As I said,I suspect it'll be less in a decent size sell off.

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22 hours ago, Bod said:

What's going on? They have 257 million shares,  a land bank valued at least $5billion, and a dividend of 11%. What's the catch?

https://www.bloomberg.com/quote/CRST:LN

https://www.crestnicholson.com/about-us/integrating-sustainability/our-data

Ask yourself who values the land bank. 

I have it on good authority that this figure is massaged to be whatever it needs to be at the time.

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7 hours ago, Cunning Plan said:

Ask yourself who values the land bank. 

I have it on good authority that this figure is massaged to be whatever it needs to be at the time.

Which is why they won't allow it to be taxed or penalize housebuilders when they set foundations and then mothball?

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On 18/10/2018 at 01:52, Bod said:

What's going on? They have 257 million shares,  a land bank valued at least $5billion, and a dividend of 11%. What's the catch?

https://www.bloomberg.com/quote/CRST:LN

https://www.crestnicholson.com/about-us/integrating-sustainability/our-data

Perfect reason for a lvt. So much debt/money in mud grass and fields.

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I viewed a Crest showhome about 5 years ago, kid you not the wardrobe doors were hanging off their hinges and there were already damp marks. I didn't buy into the "all new houses are shit" idea until I went there. :o

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12 minutes ago, sleepwello'nights said:

You should have continued in accountancy. You seem to have a good grasp of the basics.

Stock valuation - the art of making the bottom line appear to be exactly what you need it  be 9_9

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On 19/10/2018 at 11:23, Wight Flight said:

Stock valuation - the art of making the bottom line appear to be exactly what you need it  be 9_9

well ive been watching tw. slowly droping since there high of 215 ish.but there results in the week have surprised many in the market and they have increased their special divi.i should have sold at 2 quid which is what i promised myself but my apathy got the better of me.im not fussed they only cost me 32p and are basicly free has the dividends have paid more than that back.pity i only have a thousand.but come the great reset theres a good possability they could be back down to 32p lol.

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