I bought in is causing the crash.......I buy you short and you share the profit with me.....that way we break even and waste both our time. I backed Teresa May at the last election, I backed Chariot Oil and Gas all the way unto 23p (now 13p), I backed Up Global catching a falling knife, I backed Mercantile Ports (down 95%) and a few other losers. I sold a few other losers last year only to see them go up five fold. I'm still smiling............just.......so don't worry as there is always someone feeling more sick than you :/
Arguably Berk are simply stating the obvious. The gov't has targeted lifting new build supply from ca 200k pa (at the moment in the UK) to ca 300k. If you want to jump output in one of the major parts of the economy & the most labour intensive by +50% then this begs a few questions.
Where does the money for land buying come from? This will require industry investment of £100bn (double the amount the gov't paid to recapitalise the UK banks) on land alone.
Where does the (skilled) labour come from? This will require ca 1.7m workers. Answer - not without permanent immigrants - who will also require housing whilst building your home!
Where do the materials come from. The supply industry has never supplied for more than 190k units pa over the last 35 years. There is no excess capacity.
How will the planning system cope? This is already the biggest bottleneck & wildly dysfunctional. No one gets a quart out of a pint pot.
So Pidgeley is stating the obvious. New build supply will stall @ 200k units pa for the foreseeable future, whilst demographic need relentlessly rises. This implies more pricing pressure.
To correct my earlier post. BKG are not putting any developments on hold, but they are saying they are not able to increase from current level due to difficulty of market conditions. I believe it was the 5% fall in line h BKG share price that caused a drop to CRST and others in the sector.
Probably related to Berkely homes announcing on Friday that it was putting some London and South East developments on hold due to market conditions. I think the cross over read to Crest is unwarranted. BKG are right at the high end with muli million pound luxury apartments etc in what is an over unflattering London market. Crest focus on high quality family/executive homes around the South East for which demand is fairly constant IMO.
The fall in the sp does seem excessive on no news. Either someone knows something that the rest of us don't (it wouldn't be the first time) or the price is being manipulated down so someone can mop up on the cheap.
I continue to hold CRST as my only housebuilder. Baring a calamity that's about to crawl out of the woodwork I'm leaning towards recent sp movement being a buying opportunity. Time will tell.
I suspect this is Mr Mkt continuing his record of successfully predicting 7 out of the last 2 recessions. Bacause as any fule kno the house market is gonna crash. Other than a/ there's corporate specific problem, which I doubt, or b/ the house market implodes, which I also doubt, then this is starting to look v v attractive. Eye open for the AGM next week. But there has been a general sell off in builders for all the usual reasons by the usual suspects. Depends whether you're a trader or an investor. We shall see.
Good review. I previously held Barratt (a good while ago) and Galliford but sold both. I think out of the housebuilders CRST is a good choice but then I would say that ;-) Biggest worry is Woodford - increasingly think the city has it in for him.
CRST is not exposed to the problems of infrastructure companies like GFRD, nor the premium London slump which is going to hit BKG performance. Building around London and the SE remains as good a prospect as any, and CRST is "competitive" with gross margins c. 20% and content to work on projects with a big social housing content - just won a £100M+ deal in Farnham.
Rated by IIT who pick winners ... also by Woodford who has been "serially unlucky", but then he has to get one right just to prove the rule. Another company starting with the dreaded C, maybe this one will break my losing streak.
Paying down refinanced debt, although the cash position is propped up by what looks to be slow payment of trade creditors. Reasonable land bank, pipeline, work in progress. Forecasts are solid rather than spectacular. Says outlook is depressed by Brexit headwinds but I don't see how or why especially, just mantra? Have I missed something? I hope CRST haven't been selling houses on flawed leasehold terms.
PSN is more profitable with a peaky 28% gross margin but that is priced in on a sp up 23% over the year from £21 to £26+ and a p/e 12+ as good as builders get. Dividends promised to increase but they needed to catch up. More exposed if there is a cooling of demand for more expensive new homes? An unresolved image backlash against undue exec bonus payments? Govt may react to criticism that its schemes to boost new buyers have been used to inflate profits by some builders ... and PSN looks most exposed to that criticism, and frustration that affordable homes are not being built at the rate which voters want. My suggestion builders pay a £10K levy to Shelter etc for each of the 9,000 or so rough sleepers in the UK, and a £1M fine deducted from exec bonus pools when one dies on the street - not yet adopted as govt policy.
So actually on paper at least the scope for CRST to improve margin and business activity should be stronger than other builders already more profitable?
The CRST sp has not recovered from market wobble and muted response to fair results in Jan, still sits 10% lower than last March. Looks cheap to me at 490p on a forward p/e of 7.5 and 6.75% yield, 21.8p of which is just two weeks away. Consensus is fair value 550-610p, and I think broker sentiment is too gloomy, maybe on fears of limited prospects or maybe because the dividend while covered 2x is being pushed faster than earnings growth. Only one shorter at 0.79%.
IF prospects remain no worse than solid and IF there are no hidden gremlins this stock ticks all the boxes of a cheap buy.
Not quite sure I'd describe operating margin as 'under pressure.' There was quite a discussion of this y'day - you might want to listen to the mtg playback along with looking at the charts.
In fact tot co op% rose a tick in the fy & hO17. Op% (& asp) are affected by a couple of issues. A/ exiting-mothballing central London - this is a one off which at some point recovers, as there is currently effectively no development in central London (but I don't know when). B/ currently unusually high % soho units (just under 1/4 total sales - with low asp & no profit) due to opening a lot of new sites - this will invert.
But mainly CRN are about to radically increase unit output. To give themselves some insurance in the event of market weakness/asp falls on this they have step changed l/b buying to increase jv & partner land. They forego some margin but get far better deferred payment terms + l/b price flexibility (downwards) in the event of asp falls. So it's a case of op% lightly down but they end up being an asset-lite model & thus ROCE up. On this basis their £ spend will enable to buy more l/b units than previously.
In the background they like all main builders are still able to buy l/b at prices that exceed their hurdle rates (you should think why that is). Housing stock in the 2ndary mkt is at the lowest level since about the 1950s. New build looks to hitting capacity constraints about now at a level of 200k units pa for the UK. Pricing pressure will re-emerge sooner or later.
Having read their presentation, margins may be under pressure, but there is more product which leads to increased profits. With the government pressed to support housing and CN showing that it is competitive, the investment case is a no-brainer surely?
"It's been quite a year for the @GB:MCX:FTSE 250 Index, with the basket of mid-cap companies now firmly established above 20,000 after a rise of more than 12% since January. Contrast this with the tepid performance of the @GB:UKX:FTSE 100 Index, ..."
nice rise again last Friday and now news of the Chancelor is going to give us good news on the Budget...........
The SUNDAY TIMES -19th November 2017,
Budget: Philip Hammond pledges to build 300,000 homes a year
Philip Hammond will use the budget this week to announce plans to build 300,000 homes every year the equivalent of a city the size of Leeds.
The chancellor has revealed that he will unveil billions of pounds of extra investment, plus new powers and planning rules to ensure construction firms start building on sites that already have planning permission.
In an interview with The Sunday Times, Hammond said the government would stage an intervention because the market for developed land is broken with 270,000 unbuilt residential planning permissions in London alone.
Hammond vowed to do whatever it takes to get builders building and pledged that the next generation will have the same opportunities as their parents to own a home ..........
I can't see it staying down for long.
Other builders' reports have not been so good, which has perhaps cooled the sector.
As you say this is a buying opportunity, especially as there are no recorded shorts on Shorttracker.
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.