Bellway Share Discussion Threads

[midas] 08/12/2008 13:10

Richaims - Agreed the housing sector is currently on its knees but that is all factored in to current sps, and in Bellways case the drop is overdone having been dragged down with the others (IMO)

The thing here is that the Housing sector is THE sector that the Govt requires to turn around next year - It is what has driven the recent boom and it is what will drag us out of recession. The public feel good factor and wealth factor is inherently related to property.

Over the past few weeks snippets of good news have been arriving, lower interest rates, lower mortgage rates, increased lending. Early shoots of recovery i agree but shoots non the less.


HSBC to boost 2009 mortgage lending
08/12/2008

Multi-national banking giant HSBC earned brownie points with the UK government after pledging to increase the amount it lends to home buyers next year.

HSBC has boosted its 2009 mortgage fund by one-fifth to £15bn, almost twice the amount it lent to home buyers in 2007.

HSBC said it saw an opportunity to increase its market share in the mortgage market but added it would not be relaxing its lending criteria to do so. Most first-time buyers will be required to stump up at least 10% of the value of the house they intend to purchase.

HSBC is estimated to have about 4% of the mortgage market, which traditionally has been dominated by former building societies the Halifax, part of HBOS, Abbey, part of Banco Santander, and also by the Nationwide building society.

The cash constraints suffered by its parent, HBOS, has seen the Halifax rein in its lending, while the well publicised travails suffered by Northern Rock and Bradford & Bingley have also offered the opportunity for better capitalised banks to improve market share at their expense.

John McFall, chairman of the Treasury select committee, welcomed HSBC's initiative, saying that making money available for lending "is one of the most important economic issues facing us today."

The government has put pressure on those banks participating in the government bail-out to maintain 2008 lending levels next year, but HSBC is one of the few UK listed banks not to take advantage of the government hand-out.

HSBC's spending spree is not ending with its mortgage lending plans. It has also announced a $5bn special small business fund, with more than £1bn set aside for lending to UK small businesses.

The funds are in addition to the bank's general small business operations.

[richaims] 08/12/2008 12:20

midas,

Whereas I accept Bellway is better placed than its peers, I think what Bellway's finance director was reported as saying (see post 32) is very worrying for the entire sector (including Bellway).

richaims.

[midas] 08/12/2008 08:43

Which is why it is so important to remember that Bellway are so well placed with social houing etc and good financing. Other Builders have no where near the same security. Bellway are so completely different from most of their peers in the sector. share price up again today.

[richaims] 07/12/2008 00:58

This appears to confirm that Bellway will not benefit from the successive interest rate cuts and government intervention :-

Property Week 05/12/08 :

Rate cuts fail to lift Bellway

"Successive interest rate cuts and government intervention have not yet come to the aid of the troubled housebuilding sector, according to Bellway, which revealed sales at less than half last year's level.

Commenting on the government's plan to help homeowners with repossessions, Alistair Leitch, finance director, said it would have 'absolutely zero effect' on new housing.

'It will not entice Joe Public to buy a new property.'

Leitch said the 1.5 point fall last month had not brought more visitors to its building sites and yesterday's 1 point cut was not expected to make a difference."

[richaims] 06/12/2008 13:21

Property Week 05/12/08 :

Rate cuts fail to lift Bellway

"Successive interest rate cuts and government intervention have not yet come to the aid of the troubled housebuilding sector, according to Bellway, which revealed sales at less than half last year's level.

Commenting on the government's plan to help homeowners with repossessions, Alistair Leitch, finance director, said it would have 'absolutely zero effect' on new housing.

'It will not entice Joe Public to buy a new property.'

Leitch said the 1.5 point fall last month had not brought more visitors to its building sites and yesterday's 1 point cut was not expected to make a difference."

[midas] 05/12/2008 13:33

The analysts' views

Landsbanki analysts said Bellway's business model should help protect it from the housing market downturn.

"The strengths of Bellway are already showing through in this tough market - a well spread geography, astute land assembly in prior years and a cerebral approach to the market ensures its performance against its peers should remain well above average," said a Landsbanki note.

Vinay Bedi, fund manager at Brewin Dolphin in Newcastle, said: "These results and in particular the accompanying statement were eagerly anticipated by the City and, true to form, even though the results were actually better than anticipated, the shares were initially marked down. Accepted, the picture in the broad market place does not look good and indeed the worst may yet be to come – Bellway particularly highlighted the Midlands, Yorkshire and the North West as "challenging".

"However, for investors looking for opportunities and value, Bellway remains cheaper than most of its peer group and at a good discount to asset value; its trading profile is relatively defensive and management is both hugely experienced and proven. Now might not be the exact time to start adding to holdings but that moment could arrive sooner than anticipated. We remain firm supporters of the stock."

[midas] 05/12/2008 13:29

The analysts' views

Landsbanki analysts said Bellway's business model should help protect it from the housing market downturn.

"The strengths of Bellway are already showing through in this tough market - a well spread geography, astute land assembly in prior years and a cerebral approach to the market ensures its performance against its peers should remain well above average," said a Landsbanki note.

Vinay Bedi, fund manager at Brewin Dolphin in Newcastle, said: "These results and in particular the accompanying statement were eagerly anticipated by the City and, true to form, even though the results were actually better than anticipated, the shares were initially marked down. Accepted, the picture in the broad market place does not look good and indeed the worst may yet be to come – Bellway particularly highlighted the Midlands, Yorkshire and the North West as "challenging".

"However, for investors looking for opportunities and value, Bellway remains cheaper than most of its peer group and at a good discount to asset value; its trading profile is relatively defensive and management is both hugely experienced and proven. Now might not be the exact time to start adding to holdings but that moment could arrive sooner than anticipated. We remain firm supporters of the stock."

[richaims] 05/12/2008 13:09

Independent 05/12/08

"House prices tumble 1980s-style"

[midas] 05/12/2008 09:20

Bellway on track to cut debt despite sales fall
Dec 5 2008 by Chris Knox, The Journal

HOUSEBUILDER Bellway says sales are 50% down on last year – although efforts to reduce debt levels by £100m are on track.

A trading statement from the Newcastle firm showed cancellation rates between August 1 and November 30 were running at "historically high" levels of 24% and that it was selling 50-60 homes a week, down one-half on last year's levels.

Its order book stood at £340m – almost half its value compared to the same point last year – and it has delayed the completion of a number of sites, including one in Stanley, County Durham, because of a shortfall in demand.

The firm was recently forced to axe 850 of its 2,500 UK staff earlier this year, including 160 in the North East, as well as shut down three offices around the country in order to reduce its divisions from 18 to 13.

However, it did confirm it was not planning on cutting any more jobs but did say that it would be reassessing its position in the run up to its interim results in January. It also said it was not looking to purchase new land at present but was restricted to legal commitments only.

The statement said: "Pricing pressures, driven in the main by certain competitors' activities and lenders' lower valuations, could lead to continued margin erosion and if these pressure persist a further review of the book value of land and work in progress at January 31, 2009, at the time of the next interim results, cannot be ruled out."

The firm did say that it had reduced the number of its unsold completed properties by 15% since October and that it was on target to reduce its borrowings by £100m in the year to July 31 2009.

Chief Executive John Watson said: "The combination of low consumer sentiment and widespread worries over job losses is not helping us at the moment. As a result we have had to stop work on a number of sites for the time being.

"However, for us cash is king at the moment and we are making good ground in paying back much of our borrowings. Overall we are positive despite things being gloomy in the housing sector at present."

Mr Watson's optimism was shared by a number of analysts who believe Bellway is in a stronger position than most to benefit from a market recovery. Vinay Bedi, divisional director for stockbroker Brewin Dolphin in Newcastle, said: "The general consensus is that this statement could have been a lot worse. The new cut in interest rates will help it further, as will the company's strong land bank."

[midas] 04/12/2008 14:37

City regulator wants action on bank liquidity
By Chris Marshall | 11:17:58 | 04 December 2008

Banks and building societies will have greater responsibility for assessing they have enough cash to meet their debts as part of a 'far-reaching overhaul' proposed by the City regulator.

The Financial Services Authority (FSA) consultation paper, which is also aimed at investment companies, comes as part of the regulator's efforts to rectify the failings of a system which contributed to the financial crisis of past months. It has been criticised for not monitoring banks' liquidity.

Firms have been given a month to submit their views on the FSA's plans, which will allow it to improve its ability to monitor and supervise companies exposure to liquidity risks.

Liquidity risks ultimately leave firms unable to pay their liabilities. As has been seen recently, companies in this situation are often forced to prematurely sell assets to raise liquidity and then make a market loss.

Paul Sharma, a director at the regulator said the proposals took on board the lessons 'both we and firms have learned from the recent market volatility'.

Sharma said the plans would increase the overall stability of the UK financial markets. 'This builds on the international work on liquidity that is currently in train', he said.

[midas] 04/12/2008 12:58

And because of the downturn there is a big opportunity with Bellway - every cloud has a silver lining ;-)

Analysts thinl so .

##Cazenove analysts described the statement as 'unremittingly gloomy'.
But they said this was expected. With an ever decreasing debt pile, the analysts said, the group is better placed than any of its conventional volume house builder peers to benefit from recovery.
They repeat their 'outperform' view.

## Numis analyst, Chris Millington, is also bullish on the group's prospects.
'Bellway is still earning a double digit margin and has a well bought land bank,' he said, repeating his 'buy' stance.
He agreed that unlike some of its peers Bellway will not need to refinance at exorbitant interest rates and will have a material competitive advantage both during the downturn but also in the eventual upturn.

[midas] 04/12/2008 12:55

richaims - wont affect Bellway - They are a very well placed co and very well funded. This co will provide very good gains now the dust is settling.

[richaims] 04/12/2008 12:51

1% interest rate cut proves just how bad the economy is - in particular, the housing market!

As before, bounces in housebuiders' share prices will in my opinion be shortlived.

[richaims] 04/12/2008 11:09

Times Online 04/12/08 :

December 4, 2008

"HOUSE PRICES FALL AT FASTEST RATE IN 25 YEARS

British house prices tumbled at a record 16.1 per cent in November, marking the sharpest drop in property values for a quarter of a century.

Figures released this morning by Halifax revealed that prices fell 2.6 per cent in November compared with October, and are 16.1 per cent lower than in November 2007.

The year-on-year decline is deeper than falls recorded during the last recession in the early 1990s, and is the biggest drop since 1983.

The shock fall has emerged just hours before the Bank of England's Monetary Policy Commitee is expected to cut the interest rate again, after last month reducing borrowing costs by 1.5 per cent to 3 per cent....."

[midas] 04/12/2008 11:00

Again - nothing new.

The actual fall in house prices is far worse than 16% YOY. Most developers are already discounting by 25% anyway. And for Bellway all built in because of their strong cash position. Others may not fare so well.

[jeffian] 04/12/2008 10:56

richaims,
I've noticed you spamming all the housebuilding threads with negative posts so I assume you have a vested interest. Fair enough. But given the amount of negativity swirling around the entire economy, I was rather intrigued by the positives. To read the papers, you would think everyone was going to Hell in a Handcart (though the shops and pubs of West London seem to tell a slightly different story!), so my eyebrows raised slightly to see that BWY sales are running at 50-60 a week and they expect to reduce debt by £100m this year. I picked up a similar feel from the derided pubco's and brewers who are still managing to buy and sell substantial numbers of properties involving £m's. Of course business is down substantially from the heady boom days and profits will be cut for a year or two, but not all these companies are going to disappear - and why pick housebuilders alone? Look at cars, electronics, retailers, recruitment consultants............ - and spotting those that will get through this in reasonable shape is bound to reap future gains at these prices. At some point, you will have to change your tune!

Regards, Ian

[richaims] 04/12/2008 10:52

Times Online 04/12/08 :

December 4, 2008

"HOUSE PRICES FALL AT FASTEST RATE IN 25 YEARS

British house prices tumbled at a record 16.1 per cent in November, marking the sharpest drop in property values for a quarter of a century.

Figures released this morning by Halifax revealed that prices fell 2.6 per cent in November compared with October, and are 16.1 per cent lower than in November 2007.

The year-on-year decline is deeper than falls recorded during the last recession in the early 1990s, and is the biggest drop since 1983.

The shock fall has emerged just hours before the Bank of England's Monetary Policy Commitee is expected to cut the interest rate again, after last month reducing borrowing costs by 1.5 per cent to 3 per cent....."

[midas] 04/12/2008 10:41

richims - This fall in house sales was completely expected and far less than I expected.I'm in the business and the general figure is more like 70/80% across the baord. The issue here is not the declining house market - thats a given. It's all about how well the individuals within the sector survive the next tweleve months or so and comes out the other end. Forget the doomsday scenario - the property market will return.

My point here is that Belllway are dealing with this downturn pretty well better than all others and will clearly see it through. The share price has been dragged down this far purely with the generally poor position of a majority of its peers.


Others agree with me >

##Cazenove analysts described the statement as 'unremittingly gloomy'.
But they said this was expected. With an ever decreasing debt pile, the analysts said, the group is better placed than any of its conventional volume house builder peers to benefit from recovery.
They repeat their 'outperform' view.

## Numis analyst, Chris Millington, is also bullish on the group's prospects.
'Bellway is still earning a double digit margin and has a well bought land bank,' he said, repeating his 'buy' stance.
He agreed that unlike some of its peers Bellway will not need to refinance at exorbitant interest rates and will have a material competitive advantage both during the downturn but also in the eventual upturn.


M

[richaims] 04/12/2008 10:33

Poor interim statement from Bellway today.

I think the bounce in the share price is more reflective of today's anticipated interest rate cut and will be temporary.

A good opportunity to sell the shares in my opinion but no advice intended.


The Telegraph 04/12/08 :

"House-builder Bellway warns home sales have halved

House-builder Bellway has warned that it is selling less than half as many homes as it did last year and cancellations are running at "historically high" levels."

[richaims] 04/12/2008 10:27

I'm afraid the statement does not look very good to me.

I think the bounce in the share price is more reflective of today's anticipated interest rate cut and will be temporary.

A good opportunity to sell/short the shares in my opinion but no advice intended.


The Telegraph 04/12/08 :

"House-builder Bellway warns home sales have halved

House-builder Bellway has warned that it is selling less than half as many homes as it did last year and cancellations are running at "historically high" levels."

[midas] 04/12/2008 09:50

Good interim statement here. Bellway are pretty well one of the best placed in this sector to see this period through. Good sensible management strategy that many of the others should take heed of. Fall overdone been dragged down by the others, good returns here over the medium IMO.

[richaims] 02/12/2008 13:43

midas,

Understood - Thursday's interims will certainly be interesting.

richaims.