Bovis Homes Share Discussion Threads

[brummy_git] 13/3/2017 01:09

Hi Creative

As at 31st December, NTA were 757p/share. Given that Bovis can make at least 25% margins (assuming of course it doesn't balls up again) on its existing land bank and housing WIP -> then logically (all things being equal), if someone bought the business, they would have net tangible assets worth circa £9.50 per share in around 2-3 years' time.

I agree this is just theoretical, but at least it puts a line in the sand.

[creative_accountant] 13/3/2017 00:26

No chance getting anywhere near £10 for this dog! Anyway, the offer is not a cash offer, it's a share for share exchange in GFRD's case so no cash would be forthcoming, you'd just get the applicable porportion of GFRD's shares.

Further to the above, it ceases to amaze me how people think someone is going to come in and offer 1.4x nav for this appaling builder?

You are talking about a builder with THE worst management team in the sector, a bunch of incompetent numpties that I have been calling for the head of for years now (I was the first to say Ritchie was a clown and should go 2 years ago).

Think about it logically, Bovis is worth the value of its assets only, that is its landbank. Yes the value of the landbank is likely to be above net asset value as that is based on historical cost, but not by much.

Hence expecting an offer of above £10 for this dog is ludicrous- premiums are paid for strong management teams, and this does not have one. Hence it is worth net asset value tops (but realisable net asset value as that is what the land could be bought for, and all the other builders are really interested in).

[wad collector] 12/3/2017 23:49

I guess we are going to see a classic piece of share price action with an initial morning surge to 900p, various doubts being expressed and a drop to a closing price of 840p as it dawns on the market that this is not going to happen....
Happy to be wrong as I hold quite a lot of these!

[9tintin] 12/3/2017 22:16

The pressure on Bovis from the larger institutions to do a deal will be significant, but Galliford know that Bovis are in a weak position, which is why they are talking.

I'm not convinced that shareholders will get as much per share as they might expect especially as Redrow have declined the auction.

I hold BVS

tintin

[dr_smith] 12/3/2017 21:58

Thank-you Brummy Git.
Believed Redrow was a t/o target, rather than a buyer, but 2+ potential bidders is a dream scenario for bumping up BVS share price .and I believe it is generally acknowledged housing shares are at low values as all is rosy, so no upward volatility to be had for day traders.
Some excitement for a Monday morning - I have GFRD and BVS...and BKG if they come in.

[chinese investor] 12/3/2017 20:40

They won't get my shares for less than a tenner !

[9tintin] 12/3/2017 17:48

£8.86 offer rejected, as I'm sure they (GFRD) knew it would be - as an opening gambit.

The fact that GFRD are in there pitching and Bovis are talking would indicate to me that there are two parties prepared to do business.

May take a while.

Opening share price at the bell will be interesting - could be a mad scramble.

I would expect to see an initial push above the offer price, but not by much.

tintin

[brummy_git] 12/3/2017 15:20

Initial posturing.

With 2 potentially interested buyers, along with a relatively active seller, then I would be very surprised if a deal, at least above £10 per share, cannot be agreed.

IMO, it is not often that an asset of Bovis's size, albeit recently put through the wringer, becomes available to strategic buyers. Anything around 1.3 to 1.4 times net tangible assets will probably be considered as a absolute bargain by shareholders of the acquirer a few years down the line.

[latics2] 12/3/2017 14:08

Starting point I suppose.

[brummy_git] 12/3/2017 12:39

Indeed, the plot seems to be thickening (see Sunday Tel article below) – expect the stock to be higher at tomorrow’s open.

In terms of valuation, I'm guessing Bovis is worth circa 1.4x NTA or £10.50 on a standalone basis (vs 820p today), and possibly as much as £13, if taken-out following a competitive auction process.

Only time will tell


Bovis in talks with Galliford Try after rejecting Redrow proposal
12 MARCH 2017 • 11:49AM
Bovis Homes is in £2.5bn merger talks with rival Galliford Try after rejecting a competing offer from fellow housebuilder Redrow.
Shares in Bovis are expected to surge on Monday after it emerged the troubled construction firm has been courted by two suitors.
The FTSE 250- listed company, which is currently without a chief executive and is led by chairman Ian Tyler, is holding talks with Galliford Try, which has already made an all-share proposal that Bovis spurned for being too low.
At the same time, Bovis has also rejected a cash-and-stock offer from Redrow, the listed housebuilder that is 40pc controlled by founder Steve Morgan.
“Redrow subsequently indicated that it was not willing to improve the terms of its proposal and discussions were terminated,” Bovis said.
There has been speculation that Bovis could attract a suitor ever since late last year, when the builder shocked investors with a profit warning that was followed by the abrupt departure of chief executive David Ritchie in January.
It emerged later that month that Bovis shareholder Andy Brough, an influential fund manager at Schroders, had written to upmarket builder Berkeley to suggest that it should explore a merger with the company. That proposal was rejected by Berkeley.
Bovis said today that neither the first offer from Galliford Try nor Redrow’s cash-and-shares bid had “reflected the underlying value of the Bovis business”.
It added: “The board also concluded that the Redrow proposal was not in the interests of Bovis shareholders as the cash element of the offer would require shareholders to crystallise value at the current Bovis valuation.”
Bovis shares tumbled after its surprise profit alert just after Christmas and stood at 828p at the close of stock market trading on Friday evening, valuing the business at about £1.1bn.
Galliford Try, which is also a member of the FTSE 250, is worth approximately £1.3bn.
Kent-based Bovis, which is focused on the South of England and traces its roots back to 1885, conceded at last month’s annual results that it had endured “a difficult year” in 2016, which had followed “a period of ambitious growth”. Pre-tax profits slipped 3pc to £154.7m in 2016, despite an 11pc increase in revenues to £1.05bn.
Galliford Try, which is helmed by chief executive Peter Truscott, recorded a 19pc surge in profits to £63m last year.

[brummy_git] 12/3/2017 10:47

LONDON (Alliance News) - Redrow PLC has approached fellow FTSE 250 constituent Bovis Homes Group PLC about a merger that would create on the the UK's largest house builders, the Sunday Times reported.

The newspaper said the approach is believed to have been made in recent days and was rejected by Bovis Chairman Ian Tyler. Redrow could return with a better offer, however, the Sunday Times noted.

hxxp://www.thetimes.co.uk/edition/business/redrow-swoops-on-ailing-house-builder-bovis-qp65qxg5l?CMP=TNLEmail_118918_1457066

Redrow has a market capitalisation of GBP1.85 billion, while Bovis's is GBP1.01 billion, meaning a combined company would be worth almost GBP3 billion. This would still put it well short of bigger rivals such as FTSE 100-listed Persimmon PLC, with a GBP6.53 billion market cap.

In January, another competitor, Berkeley Group Holdings PLC, reportedly rejected a merger with Bovis Homes that was proposed by Schroders Investment Management, Bovis's second biggest shareholder.

Earlier that month, Bovis Chief Executive David Ritchie had stepped down following three profit warnings for 2016 and was replaced as interim CEO by Earl Sibley, Bovis's finance director.

[brummy_git] 12/3/2017 10:43

Probably explains the recent share price strength.

www.thetimes.co.uk/edition/business/redrow-swoops-on-ailing-house-builder-bovis-qp65qxg5l

"Redrow swoops on ailing house builder Bovis. Former Wolves owner Steve Morgan tables £3bn deal with scandal-hit rival. March 12 2017, 12:01am, The Sunday Times"

Apparently Schroders, have also previously suggested to the board that they seek a merger with another housebuilder, such as Berkeley homes.

[wad collector] 09/3/2017 09:26

You been reading the adverts?

[kev0856153] 02/3/2017 14:18

Stunning performance since the results. Well done if you bought in.

Bovis Homes - A byword for quality. Superior homes at affordable prices.

[chinese investor] 01/3/2017 11:03

Looking Good !

[shaker44] 24/2/2017 15:24

You are not wrong Source!

[source] 24/2/2017 11:58

Deutche are shiysters for Bovis. They had a £15+ target for them before last weeks profit warning. Their views (& indeed any paid for brokers) are to be taken with a heavy pinch of salt by any normal investor in my view. Regards,Source.

[kev0856153] 24/2/2017 08:31

Bovis Homes tops 'liquidation value' chart suggests Deutsche
Share
11:55 23 Feb 2017

Bovis has fundamental value despite its problems suggests German broker
picture of houses being built When all else fails the houses and land are worth something suggests Deutsche Deutsche Bank has analysed the UK housebuilders and decided if they shut tomorrow Bovis (LON:BVS), Taylor Wimpey and Berkeley Group would still be good value.

Normally the broker values the builders on a price to asset and dividend yield combo, but with M&A becoming more prevalent it has re-examined 'liquidation values'.

The German broker concedes using liquidation values is unusual but does highlight the support fo the sector.

“To be clear while we run this analysis across the whole sector, we do not see businesses being run in this manner nor do we examine catalysts to capture this value,” it explains.

“But even without valuing the ability, experience and expertise to continue to invest in a land market offering 25% ROCE [return on capital], we believe the sector offers 40% upside to current market values.”

The greatest potential lies at Bovis among the mid-caps and for the larger caps with Taylor Wimpey and Berkeley, concludes the broker.

Bovis has struggled recently, with a payment of £7mln compensation to customers for poorly built homes the latest in a run of bad news.

Even so, Deutsche calculates that the builder’s significant land asset is equivalent to its market cap and with significant work-in-progress invested and strategic land the liquidation value is over double the group’s current stock market valuation.

But such is the uncertainty around Bovis at moment that Deutsche only sticks a ‘hold’ rating on the shares and 760p share price target.

At Taylor Wimpey (LON:TW. Target price 177.5p), the broker sees 40% upside from current market to estimated liquidation value, while at Berkeley (LON:BKG) gross profit on its land bank is close to £6bn or 150% of market cap while work in progress is equivalent to nearly half on top.

[shaker44] 23/2/2017 12:15

Yep, Comes with any new build. Long snagging list. No one wants to fix. No money in it! Not only BVS

[death by donut] 23/2/2017 11:36

They,re all the same tbh. I recently had an internal wall 25mm out of square over the width of the doorway. This would have been blatantly obvious once id tiled floor. They knocked it down and reblocked it. Not Bovis btw.DbD . Tiler

[mike456] 22/2/2017 13:54

The problem for Bovis isn't so much sorting out the historic problems, as a figure can be put to that by way of a provision in the accounts.

IMO the main issue is in respect of future trading, as I for one wouldn't consider buying a house from a builder which was turning out houses lilke that one posted by mondaytuesday above

[the_equaliser] 21/2/2017 21:40

21 Feb Numis 860.00 Add
21 Feb Beaufort... 840.00 Buy
21 Feb JP Morgan... N/A Overweight
21 Feb Liberum Capital 757.00 Hold
21 Feb Deutsche Bank 969.00 Hold
21 Feb Peel Hunt 820.00 Hold

[fernandesb] 21/2/2017 18:53

Monday/Tuesday,
I will say something,i actually read the front page article on the Daily Mail and was very worried as I had already placed my spread bet,however sometimes you have to stay cool.No one and I mean No one can predict anything you must sometimes go by your "Gut Feeling"

[shaker44] 21/2/2017 16:54

Yep. All this stuff is well known and over compensated for in the share price
Good value at this level. All large builders have bad rep for snagging. Bvs is just worse.