(PSN.L) Persimmon PLC Buy/Sell

The worst of the UK housing market downturn was in the final quarter of 2008. As
has been clear in UK mortgage approval and housing transaction figures, activity
levels have recovered a good deal since then.
Although nowhere near as timely as the aforementioned data series, housing start
figures confirm this recovery. Official figures from the UK's Department for
Communities and Local Government indicate that English housing starts, seasonally
adjusted, recovered from just 16,210 in Q4 2008 to 25,820 in the third quarter of
this year (Q1: 18,350; Q2: 21,840).
That said, while inflection points are crucial, there is no doubt that English housing
starts have still some way to go before they return to historic averages. English
housing starts on a seasonally adjusted basis have typically ranged 35,000-45,000
per quarter.
But the trend is definitely positive. Housing starts in Q3 were 16% better than Q3
2008, the first quarter of year-on-year growth since Q3 2007. Mirroring the third
consecutive quarter of sequential growth in housing starts, there are definite signs
that the publicly quoted housebuilders have begun to ramp up activity. Further
down the chain, the product manufacturers and distributors should feel the benefit
from a recovery in housing starts during 2010.

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I sold out a while ago and have been regretting it ever since. A small drop Thursday and I am back in for the long haul!

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Nice update today.
Good God..can you believe, the world in not ending after all lol!

Margins creeping up and debt been paid down big time. You cannot beat it. And no rights issue!

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Suey, I don't think the posts you mentioned have dissappeared....

I think you posted them on TW board, not on PSN.

Forgive me if I'm wrong.

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Hi Sue,
I see the entry point around the £4 mark and think getting in now might be a bit dicy.
I'm not ware of any skeletons in the cupboard relating to PSN. They have low debt, decent management, and in my humble opinion will emerge from the recession intact and stronger than many of their peers.
One of my long term holdings but I'm topping up around the £4 mark on the dips...
Regards nqm


By Anita Likus
Of DOW JONES NEWSWIRES


LONDON (Dow Jones)--The U.K.'s largest house builder, Persimmon PLC (PSN.LN), doesn't have a huge number of opportunities to buy land as forced sellers remain limited, and potential joint ventures with banks will depend on lenders approaching the company, Chief Executive Mike Farley said Monday.

CEO Farley said Persimmon has some seven years of land supply through its 62,500 plots of land owned and under control and isn't "desperate to buy land."

He said that although opportunities remain limited and that he can't see "a huge number of deals taking place in the market," Persimmon can buy land up to 50% below the peak price.

The company plans to focus on land in the south of England and to build family homes, which are the best sellers at the moment.

Regarding a potential joint venture with banks, where lenders provide land on which house builders could build, with profits from sales shared between the two parties, Farley said it is up to the banks to consider Persimmon.

"They are aware that we are a major player in (the) residential market so we would expect them to consider Persimmon," the CEO said.

Rival house builders Bellway PLC (BWY.LN) and Barratt Developments PLC (BDEV.LN) are already talking to Lloyds Banking Group PLC (LLOY.LN) about buying land from the lender and potential joint ventures.

Experts view this option as a logical step as it would help Lloyds, one of the U.K.'s largest landowners, to reduce its risk exposure as it tries to pay back state aid, and give builders land to develop.

Bellway's Finance Director Alistair Leitch told Dow Jones Newswires back in October: "We are waiting for Lloyds to resolve its situation...the ball is in their court now."

Persimmon earlier Monday released a trading update in which it confirmed that house prices were stabilizing and said that it has already sold up for 2009, and that GBP500 million of sales have already been taken for 2010.

In addition, the company again reduced its full-year debt guidance, which is now expected to be significantly below the GBP400 million previously expected because of strong cash flow.

This gives the company sufficient fire power to buy land, without having to go to shareholders for more cash, as some rival house builders have done.



-By Anita Likus, Dow Jones Newswires; +44 20 7842 9407; anita.likus@dowjones.com






(END) Dow Jones Newswires

November 16, 2009 04:06 ET (09:06 GMT)

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That's strange, Tas just gave me some advice, but now the posts have disappeared - his and mine?
Anyone have this happen before?

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Hello all,
I was just researching this share and I don't think I've ever seen such a nice upward trend, I might join uou.....
In case I miss anything, I'd be grateful for any rumours busted or looming nasties such as RIs or consolidation.
Many thanks in advance
Sue

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For those that might have missed it:

Cancellation rates dropped
Like TW are fully sold out for 2009
Selling price up 6% since 1st July
Concerned about unemployment and mortgage availability

http://www.iii.co.uk/articles/articledisplay.jsp?section=Markets&article_id=10060707
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Persimmon (PSN) today stoked hopes of recovery in the housing market with an improvement in third-quarter trading activity.

The UK's largest housebuilder by volume said activity levels have continued ahead of last year since reporting its first-half results at the end of August. Prices have also held firm while cancellation rates have dropped to around 16%.

It is fully sold out for 2009 with £500 million of sales in the bag for 2010 - up around 50% on the same period in 2008.

Persimmon expects to complete around 9,000 homes this year, with the average selling price up 6% since 1 July to £173,000.

This is largely due to a change in sales mix, but also reflects some modest price growth in some regional markets, it said.

The FTSE 250 group's comments follows upbeat statements from Redrow (RDW) and Taylor Wimpey (TW-) last week who reported firmer prices, stronger reservations and lower cancellation rates as the sector starts to emerge from one of the most severe downturns in decades.

Persimmon today echoed the underlying positive sentiment although it remains concerns about rising unemployment and a lack of mortgage availability.

"Whilst we remain concerned about the potential impact on our markets of any significant increase in unemployment over the coming months, debt is reducing well ahead of our previous guidance, sales volumes have stabilised and pricing conditions are currently more positive.

"Having strengthened our forward order book and reduced borrowings significantly, the group's financial position remains strong," the group said.

It added that its debt position will be "significantly lower" at the end of the year than its previous guidance of £400 million. This will allow it to purchase new land and open outlets.

Shares in the housebuilder have more than doubled over the past year amid hopes that the worst is over for the sector.

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Get Level 2 now for only £20.00!

The IMS looks good too! Debt dropping fast, although they did have a share placing which must have brought in about £25m. If UK property keeps the upward trend PSN must expect to make profits soon given the extent to which they have written down and reduced their cost base.

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gubu..all is going according to plan!
There is an IMS out on Monday also.

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Looks like another run up is underway after a spate of good news on the UK property market recently.

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Johnga,
Afraid I think the recent fall in housebuilders is a blip that was based on fear and uncertainty, when the TW statement came out along with the RDW and BDEV takeup of 97 and 93% everyone realised that things were looking good in the sector and hence everyone got a good dose of optimism. Cant see a reversal myself, just a pause in the trend. I think TW prooves this as it dropped down to 35 and broke the trendline and now its back of the major resistance of 40 again, and it held onto it today. I see a further rally in the sector.

The reason I didn't use the december lows is because I think they are so skewed by credit crunch they aren't all that effective anymore, however I do look at them and some points do correspond quite well. So it wont be vastly different.
As this BB seems to be waking up i'll check it more often,
RM

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IANA chartist, but the shares bounced back over the 200 day SMA yesterday. Might be, that, in conjunction with the +ve statement? I dunno, I just look here every now and again at how my losses are reducing. I expect that trend to continue with plenty of hiccups along the way.

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Thanks TOT.

Agree that things are looking up but too early to crack open the champers just yet!

By the way, in my last posts it should have read "Shorters having run the prices down, are NOW reversing their bets!"

This article may be of interest to some:

http://www.iii.co.uk/articles/articledisplay.jsp?section=Markets&article_id=10059292

Rhian Nicholson
04.11.09 10:32

Taylor Wimpey (TW-) and Redrow (RDW) today put the wind back into housebuilders' sails as they reported a welcome improvement in housing market conditions.

The FTSE 250-listed groups have seen firmer prices, stronger reservations and lower cancellation rates as the sector starts to emerge from one of the most severe downturns in decades.

Taylor Wimpey, which tapped shareholders for £510 million earlier this year, has seen stabilising order levels and a 9% rise in selling prices of £163,000 from the first half of the year.

The UK's second largest housebuilder by market value put this down to "planned improvements in our mix towards housing rather than apartments, as well as price increases achieved over the last three months."

Meanwhile Redrow reported a 47% rise in total net private reservations for the first 18 weeks of the financial year compared to the same period last year, averaging 45 homes a week.

It now intends to focus on family housing in a bid to boost selling prices further.

Taylor, which last year was battling for its survival, added that the current value of its order book stands at £1 billion, down fractionally from £1.06 billion last year. With 2009 now fully sold, Taylor says its focus is on achieving price increases in its 2010 order book.

Its net debt levels have also fallen from £1.87 billion last year to £860 million. It hopes to reduce this further to below £800 million by the end of the year.

"Our own performance has remained encouraging since the half year. We did not experience the usual industry seasonal slowdown over the summer and sales rates have remained solid into the autumn," it said.

However, it also cautioned that: "Sustaining the current recovery will be dependent on improvements in mortgage availability and the wider economy."

Our team at iBall TV offer an alternative view of Taylor Wimpey. Watch it here

Over in the US it says that both volumes and prices have been stable against the first half. "Foreclosures are not having an incremental negative effect and inventories in the market are falling. The company rightly points out that US affordability is now very good," says Imran Akram of Collins Stewart.

Redrow, which today said 97.2% of shares had been snapped up its recent 13 for 14 rights issue to raise £150 million, also remained cautiously optimistic.

Following the cash call and the acquisition of Harrow Estates, net debt will stand at around £65 million.

It said: "The underlying housing market remains influenced by the availability of mortgage finance and consumer confidence generally, but we enter 2010 well placed to meet the challenges and opportunities ahead."

"We anticipate that the land market will gradually return to more normal levels of activity over the next 12-18 months with increasing numbers of opportunities emerging," Redrow added.

For more on the latest from Taylor Wimpey check out Edmond Jackson's podcast on the housebuilder.

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Get Level 2 now for only £20.00!

Thanks Imperator, very good summary. Was a bit distracted with work this morning so didn't get time to check things out myself. Looking up but the market's not out of the woods just yet in my view.

ToT

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TOT,

All house builders are rallying big time today based on the following:

1) the fact that the recent sell off with builders was over done
2) There was a very upbeat trading statement from TW today
3) News of a successfully received rights Issue for BDEV with over 93% takeup
4) Shorters having run the prices down, are not reversing their bets.
5) A rising market.

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SP is up 11% on no news. Are the institutions piling in now or what?

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ryan, interesting analysis with lovely charts.

However you don't appear to have taken on board the possibility that the trend may have reversed and that support (see Bellway today) has been broken. This would apply to the others also.

I'm staggered that HBOS should be allowed to hold such vast swathes of land. 150,000 houses?! Doesn't that in itself create a false property valuation and create and sustain the bubble? 'Giving' it to the likes of BDEV and PSN etc should be a passport to those of us wanting to buy from them to request the 'gift' to be passed on price wise?

My view is there's lower to come as banks fail to lend and unemployment increases. I think your Fib retracement could be effective from December lows rather than July to get a more accurate support level.

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Good Evening /Morning,

Although this is more for TW and BDEV it has some information that some may find useful. So please take a look as there are some charts too

As this post covers my thoughts on everything related to housing stocks that I have been thinking about over the past week or so, it is very, very long: Too long even? But to read it all (if you have the endurance) you will have to press the “read full message” button at the bottom of this post.

Thought I’d make this post cover TW, BDEV and the sector as I feel they are all moving and acting very similarly at the moment. To begin I think I need to discuss the role that market direction and general investor sentiment will play on the sector, and on other sectors and how in the short term it would be prudent to sit tight and do nothing.

First and foremost let’s examine the FTSE. I’ll be referring to the 100 in this example as that’s what I use and I’m sure that’s what many others use most frequently. I am aware they are both on the 250. Well it’s certainly been a shaky start to the trading week with the banks plummeting out of the sky and everything else following suit, except for the super large caps or utilities. This is skewing the index, which rose yesterday although as I’m sure it was evident to everyone – was very red. On an equal weighted basis the FTSE 100 stocks fell -0.69% today whereas the index closed with gains of 0.18%, which as you can see is almost a percentage point out. This artificially high FTSE, which I imagine is being driven up by mutual fund managers, is a poor representative of the market as a whole which isn’t holding up nearly as well as it was last week. I feel the critical peak of this rally came when the S&P 500 hit 1,100 and then came down with a thud with the DOW now almost 200 points away from 10,000 the celebrated level. (I flicked onto fox business the night it first closed above there and they had a special feature on how good it was. As a rule whenever the TV folk celebrate, sell, sell, and sell.) Now I do not doubt that the DOW will go above 10,000 again, which in the next year any wise man would guess that it would significantly, however I think people have realised we have moved too far too fast and now we need to pause and pull back. This pull back will have big repercussions on the housing sector, the banking sector and basically any sector that isn’t super defensive.

The most pressing key point I can give which suggests markets will roll over is the good news / bad news indicator (yes I named it for effect ) if the market reacts to good news but ignores bad news; e.g. goes up on good news but doesn’t go down on bad. Then you should see a rise, however the opposite could be said for the current sentiment. I think anyone who has recently read “Reminisces of a Stock Operator” will agree with this, albeit in the book it is based on buying/selling pressure. I won’t quote but summarise:
A tipster meets with a successful Wall Street speculator in his office and says “so and so is buying up as much of company ABC as he can buy” and the speculator thanks him for the tip and phones his broker selling 10,000 of ABC at market and observes the price holding, he then repeats and sells 10,000 more, but again no real downwards move. He then covers his position and the stock rises, and then he begins buying and the stock goes up.

Now although this may not be the greatest example as it uses buying instead of news (and buying is obviously the better indicator) you can see the resemblance except it would be in reverse: The financier puts lots of bad news on the market and it would fall, but on good news it wouldn’t rise back. A clear bear sign. Too add to this point, anyone who has been watching the American housing sector and market in comparison to the British one in recent days, when I posted this list:

BEAZER, BZH: 3.16% 09:42EST
LENNAR, LEN: 1.13% 09:42EST
PULTE, PHM: 0.19% 09:43EST
DR HORTON, DHI: UNCH 09:44E

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http://www.guardian.co.uk/business/2009/oct/25/lloyds-hbos-land-builders

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