Crest Nicholson Share Discussion Threads

[1gw] 19/5/2018 11:24

Henderson Global Investors increased their short meaningfully on 16th, from 1.3% to 1.6%.

[valuehunter1] 18/5/2018 17:19

Well said Jonwig, I'm a buyer at these levels and see these recovering quite soon as we approach 12/06 and the PBT numbers are flashed

[jonwig] 18/5/2018 16:25

Just to report facts: Stone sold 250,000 shares on 18/04. He still holds about 3.5 m shares, so he sold some 7% of his holding. The results to 30/04 will be announced on 12/06.

The close period for dealing "is the time period between the completion of a listed company's financial results and the announcing of these results to the public. The close period is typically regarded as the one-month period preceding the release of a company's quarterly results, and the two-month period before the release of its annual results."

What, please, is he guilty of?

"Pals/Crooks in the City". Only two holdings announcements were made since end-Feb: both Blackrock and Woodford were buyers.
On the day before the trading statement, the share price rose ... a bit.

When small investors lose money, too many of them blame dark forces of conspiracy rather than bad luck or bad judgment. The fact is, serious small investors can generally beat the market and beat the fund managers.

That's not to say CRST is blameless: clearly management have issues to address, but at least the company isn't burdened with debt and isn't in intensive care.

[1gw] 18/5/2018 16:01

I still like the company, so this morning I sold my last remaining Telford shares and I've just now added here with the proceeds at 420p. Crest now my sole remaining housebuilder and the third biggest holding in my portfolio.

I'm betting this is now oversold, with something close to capitulation, even from some of the comments on this board. But even if that's true, it could of course still fall further from here.

The curse of woodford strikes again?

[inki] 18/5/2018 15:05

Perhaps one day shareholders may start to take action on reporting insider dealing, which reflect the attitudes of directors, or the Chairman in the last RNS.

[dov] 18/5/2018 14:36

I think the last poster said it all The only place this share is going is down what's needed is probably new management just as happened with BVS this one has clearly lost the confidence of the market and we need some good news quick otherwise it's sub £4 and lower coming very very soon

[wilkie_hk] 18/5/2018 13:33

Well the City appear hell bent on giving CRST a damn good kicking. On the basis of what was in the public domain prior to the trading update and considering the valuation of it's peers, the share price should have been around the £6 mark. As we had seen a divergence of share price with it's peers, many, myself included were half expecting that there must be 'something going on'. So, we get the trading update, which chips the profit margin from an average of 19% (18-20) down to 18%, a 5% percent reduction and the stock looses 20% (assuming that things will settle around £4). Surely, the City already was accounting for this in the depressed price before the announcement. So now, the suspicion is that the update has significantly underplayed the decline in operating margins that will play out as we move forward. Even if we assume that EPS will remain flat for the next 5 years at 66.1p, that is a steady PE of 6. Surely, a PE of 8-10 should apply in this scenario, if we were to view CRST as similar to a high yielding no growth utility. In this case 'value would owt' and we would see a return to 550p to 600p in the future along with the dividend being sustained at 33p (close on 8% yield). However, unfortunately, I suspect this may be the start of a series of trading statements over the next year or so that will gently let us down. The crooks in the City have probably been made aware of this. As for the board, as per most directors of FTSE companies they will be in it for themselves, with the game being to line their pockets as much as possible without the shareholders kicking off.

[dov] 17/5/2018 13:10

Thanks will have a look quite tempted by TEF

[jonwig] 17/5/2018 12:33

@ Dov - a housebuilder nobody seems to have heard of! Springfield Properties [SPR]. Had a pretty good run since IPO though.

[dov] 17/5/2018 11:57

Market does not rate the management rightly so it has underperformed to longBetter alternatives out there any suggestions

[jonwig] 17/5/2018 11:33

@ SteMiS - their product mix is wrong for the current market: higher-priced homes, very few sales to first timers, and a sluggish second-hand market. Add cost inflation and there go your margins!

If, as you suggest, management have been misreading signals, they ought to be able to address that, but not immediately with the current pipeline. The trading statement suggests they want to ride this through rather than change tack, which does rather support what you say!

[stemis] 17/5/2018 09:22

I think you have your answer there to why CRST is lowly rated compared to other housebuilders. The market just doesn't rate the management.

Sales up 11% volume, 5% mix, 0% price rise
Costs up 11% volume, 5% mix, 3-4% cost increases

Result, flat profits. Running just to stand still...

Next year, if they can't address this, and can't increase volumes, you'll see a 14-18% drop in profits.

[jonwig] 17/5/2018 06:37

Citywire yesterday:

Housebuilder Crest Nicholson (CRST) is too focused on volumes rather than margins, leading Jefferies to downgrade its estimates.

Analyst Anthony Codling retained his ‘buy’ recommendation but reduced the target price from 720p to 638p. The shares fell 12.8% to 430.6p yesterday.

Codling said he had ‘followed guidance that selling prices will peak in 2018 and then reduce by 2% per annum’ and believes operating margins ‘will be at the low end of the target range – around 18% rather than 20%’. Dividend expectations were also cut but ‘even after the cut, the yield is an attractive 8%’.

‘Crest is not alone in finding growth difficult to execute and we are downgrading our estimates following their trading update,’ he said.
‘It seems to us that they are more focused on volumes than optimising margins. Unfortunately, due to a shift in market conditions, while their product may well be in the right place, it is not being pitched at the right price.’

[dov] 16/5/2018 17:42

I am afraid will see £4.00 on these in the coming weeks.

so hope i am wrong but have not been so far on calling these

[spob] 16/5/2018 17:41

Crest Nicholson warns of margin pressure

By Jonas Crosland

IC



Margin growth is at an end for now, according to housebuilder Crest Nicholson (CRST), prompting a double-digit slide in the shares on the morning of its first-half update. With a high exposure to expensive houses, where selling price inflation has contracted, Crest still has to contend with build cost inflation of 3-4 per cent. Sales are still expected to grow, however, helped by a 6 per cent increase in the number of sales outlets.

It is still too early to tell whether the lack of margin growth will apply to the other housebuilders. Crest is different in that almost a third of the houses it builds command an average selling price of over £600,000, taking them out of the reach of Help to Buy. In fact, sales at this level have a greater interdependence on activity in the second-hand market, which has continued to show a steady decline in transactional volume.

Crest has admitted that margins for the year to October 2018 will be at the bottom end of the 18-20 per cent target range and down from 20.3 per cent in the previous year. The focus now will be on addressing the cost base and the overall efficiency of its operations.

[ed 123] 16/5/2018 17:00

Spob.

Crest is building across the southern half of England, but there is a concentration in and close to London. It's gradually unwinding this south-east focus, eg. created a Chilterns Division in 2015 and a Midlands division in 2017 (which completed the coverage to the full southern half of England). 52 Active sites, of which 19 are in or close to London (ie. within 30 miles of the centre).

Selling outweighed buying in the afternoon. May have further to fall tomorrow?

[spob] 16/5/2018 16:29

sorry for being a lazy git

haven't looked at this for a long time

[spob] 16/5/2018 16:28

what's the geographical spread for this one

is it mainly london/southeast ?

[jonwig] 16/5/2018 14:37

@ hpcg - your 2047 is about right. Housebuilders have always been low-PER rated (apart from the basket cases) and the market is behaving as though we're back into the cyclical downswing. But there's politics to think about nowadays!

I thought 434p too good to miss out from, though it wasn't the bottom.

Some posters on ADVFN think if you're mildly cautious you must be short! they don't seem to realise you might just find it interesting to see things unfold. One can learn from watching.

[hpcg] 16/5/2018 12:58

No I'm not short - its too expensive and the builders are still throwing off cash. I like to short indebted companies and that isn't the builders. The worst that can happen is profits come down. To be buying now one has to think this is the bottom.

[essentialinvestor] 16/5/2018 11:24

It may be Woody adding, that's not meant facetiously.

[dansaunders25] 16/5/2018 11:21

Thank you all for the information.

Its easy to forget the wider macroeconomics and get carried away when looking at house builders sometimes, especially when they can look really cheap on reasonably solid fundamentals.

Gonna do a little bit of study into the housing market and current government policy before making any decisions I think.

[mattcookson] 16/5/2018 11:19

Don’t leave it till too late Minerve. share price is on its way back up already. 2.1M bought this AM & 1.3M panic sold :). Perfect time to snap this on the cheap. With circa 7.5% divi yield and massive housing shortage in the UK, CRST will do well over the coming months.