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[smithie6] 24/2/2022 13:09

Broker's estimate seems a bit pessimistic to me.

[harrogate] 24/2/2022 08:52

Hi. The difficulty around the numbers going forward is really about HRMS. The brokers have 15.4m In JV profits ( post tax ) for this year but only £10.5m for each of the next 2 years so this more than offsets the growth in services and land profits coming through. The key here is that the sustainable earnings from HRMS are going to beat these numbers given the momentum over there. It does make it difficult to see the growth

[smithie6] 24/2/2022 08:15

Russia invades/attacks 2 eastern regions of Ukraine.

Perhaps the spot price of iron, zinc & technical coal will rise in this time of uncertainty as buyers rush to buy to increase their stocks in case there are problems in supply.

[smithie6] 23/2/2022 19:41

The analyst is not allowed to include probable or likely sales, only signed sales ?

Might that be part of it ?

----

Anyway, keep that new carbon pulveriser chugging away at the German JV :-)

(It is new, so there will be depreciation on its cost, reducing the PAT, while the cash generated will be higher since depreciation is not a cash cost. It made ~£9million PAT in H1. :-) )

(If you want to turn molten iron into steel I believe it is what you need. (Add the coal, it burns & that adds carbon to the iron, & 'voila', you have steel)).

[castleford tiger] 23/2/2022 17:22

Harrogate

I was a little disappointed by the forecast eps going forward.

They don't show much to go for in earnings
clearly we may get upgrades but I felt a little flat tbh

Tiger

[smithie6] 23/2/2022 11:00

Btw
Zinc price has risen from 2700 to 3650. $/tonne

Since oct. 2020 till now.

Steady up trend, so odds are that it will continue imo.
(& as I posted some times before, car production is increasing & that is a big consumer, for plating the steel bodies.
Ah, a penny drops.
The car bodies are 'phps' dipped in liquid containing zinc I think, not molten zinc. And the German JV produces zinc in a liquid I think. So, phps sold directly to car industry, in a form complying with their specs.

(But noting that I am not an expert on dipping car bodies !)

[smithie6] 22/2/2022 10:49

So one analyst expects a measly £1.5 million for HSP from a sale worth £25 million, before 1/2 of the construction costs, for HSP !?

I don't believe the analyst. I am sure it will be notably higher. Otherwise it is not worth the effort imo, 6% return on the HSP part of that sale, no way, impossible imo.

Perhaps the profit number is low if the analyst has assumed that there are no other unplanned land sales in that year (2024) & hence the cashflow generated has to support staff costs of the Unity team & the HSP land division team. While many PIs might base their estimates on likely turnover/profit the analyst perhaps has to base his calcs. on known sales & perhaps can't include possible sales.

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When sell land for housing HSP doesn't have to pay to build the houses. Perhaps HSP would be better off selling land assets for housing rather than for warehouses if it provides a low % return after the cost of building the warehouse(s).

[harrogate] 22/2/2022 10:35

See the broker update. They increased HSP profit by £1.5m in 2024 on this development after this announcement. A 9% increase in EPS for the year

[smithie6] 22/2/2022 10:17

Anyone got any estimates on how much profit out of yesterday's sale of £50 million, after the future construction costs ?

£10 million costs ?, £40 million PBT ?( HSP own 50% of the JV)

[smithie6] 22/2/2022 08:57

Thanks for that link Tiger, to the verbal/human presentation of that news from yesterday, from Hargreaves.

& well done Hargreaves for doing it (always nice to feel that a company is trying to provide info & be communicative with shareholders & the market, & to see a human face)

Interesting to see that at the end of the presentation there are some artist impressions of what these new commercial buildings will look like & showing the adjacent car parks.

[harrogate] 22/2/2022 08:57

Can you guys open a new board on earthworks and the challenges and problems please :)

[muckshifter] 22/2/2022 08:45

Yes Smithie, if floor level tolerance and stability is vital to the ultimate user of a distribution centre, a long term guarantee of floor level would be normal. That's nothing like the NHBC thing you write about, it would be very specific to a particular contract - about five years ago, I was involved as an advisor to the main contractor on a big muck project for a very large factory complex in very bad ground with just such a guarantee.

Again, the key question is what are the needs of the ultimate user.

Motorway building is very different. As described earlier, part of the M18 was expected to settle because of mine workings. On motorway contracts you were often offered two alternative Bills of Quantity, fully flexible and semi rigid, with the possibility of also offering rigid as an alternative design. But in bad ground areas it was just fully flexible, with often embankment surcharging to speed up settlement if the ground was expected to be reasonably stable under load. The idea of surcharging was that 90% of settlement could be expected to occur in something like three to six months, but it was always monitored carefully and the contract documents always stated the worst expectations. There was always subsequent settlement after the removal of surcharge and construction of the motorway, but it had been minimised. Some of the settlement Beeks is writing about was probably mining related and the ones I wrote about earlier were a mixture of bad ground and mining settlement.

[castleford tiger] 21/2/2022 22:18

hxxps://youtu.be/XFlB05TcnZg

[smithie6] 21/2/2022 20:03

Muckshifter

Do you know, would the sale of these types of big warehouses normally include liability for X years after sale for any types of problems, leaking roof, subsidence etc etc.

(New houses come with some g'tee I think but I think to get the 10year g'tee (is it called NHBC or something) then someone has to pay for it I think, either the builder or the buyer. Maybe HSP will buy insurance to cover risks after delivery, or the client (if he wants a 10 year leaky roof g'tee, or for very strong winds, then its up to him to buy an insurance package or accept the risk, imo)
------

Life & business has many risks.
Some people get hit by vehicles when they cross a road. But most risks never happen of course.

[smithie6] 21/2/2022 19:56

..interesting

"Soft ground" "a rotational ground slip occurred....embankment..."

Seem to be in line with what I mentioned, slippage of wet soggy soil (with contents mix XYZ) due to gravity is a risk everywhere, increased risk of movement if there is a bigger gradient.

But that is not a risk due to mining tunnels underground. Different.

Landslides of wet sloppy ground, happens around the world all the time.

One assumes that the warehouse designers are qualified & will consider it during the design phase.

I don't have a hiking map in front of me for that site to see the local gradients, but since they are building enormous warehouses (which need a flat floor to easily move forklifts etc around) I assume that it is a fairly flat site & not mountainous ! ;-)

[muckshifter] 21/2/2022 17:42

One more point that I forgot in my quick response to you before rushing out to meet the wife, Smithie: A friend of mine ran a small advanced earthworks project on the M62 section very near where it and the M18 join, ie. not far away. It was a project to surcharge at a carefully controlled rate of filling, the soft ground in advance of the construction of the M62. The project was designed, checked and no doubt double checked by the West Riding County Council sub unit of the DOT Road Construction Unit.

A rotational ground slip occurred not long after the embankment was completed, and in fact a couple of years later the WRCC sub unit agreed a deal with me to reinstate the farmers field adjacent to the M62 section which we had just built.

My point is that if the DOT with all its caution, checking, and unlimited design expertise got one section of the M18 and one of the M62 that I worked on badly wrong, while not under any sort of time or budget pressure, and Keller, the acknowledged expert contractor in all things ground engineering, came badly unstuck on a project where they designed the work, this stuff is most certainly not without risk. And if the JV has contracted responsibility, you would be surprised by how difficult it is for them to shovel the risk successfully on to subcontractors.

PS. But the most important point in relation to the dangers of bad ground causing foundation problems is whether or not the client requires a very tight floor level tolerance with no allowance for settlement - and we don't know who the eventual intended purchaser is. I believe the "client" is the NFU Insurance company in disguise. They may or may not have clients lined up to lease the finished buildings - probably they have but if not, allowing a loose tolerance on floor level or no long term commitment to floor level stability would perhaps reduce the potential value.

[beeks of arabia] 21/2/2022 16:46

I have to say though, subsidence in the area has gotten much worse over the last, say 5 years. Roads sinking all over the place.

More of a generic statement than relating to HSP! I have no investments here for ethical reasons (I know too many people in the company, past and present).

[beeks of arabia] 21/2/2022 16:42

I'm sure the correct due diligence will be done, there are detailed maps of such mining activities.Interestingly, some of the larger industrial sites in the area are sat on islands whereby they had to buy the mining rights from the ncb to ensure no subsidence.

[smithie6] 21/2/2022 16:05

Beeks
You think these warehouses will suffer subsidence ?

Or far enough away from the A65 subsidence ? ;-)

[beeks of arabia] 21/2/2022 15:09

Anyone thinking that building next to a motorway derisks subsidence needs to go drive down the m62 between Kellingley colliery and Drax power station, it's like a roller coaster at times!

The best road in the area however is the a645 just to the south of the A1 Campsall/Upton junction - probably the worst subsidence i've ever seen.

[smithie6] 21/2/2022 14:50

Well, one assumes that the warehouse builders will do whatever is needed.

Building foundations for tower blocks, for example, is it 200 floors high, there are different ways to do it depending on the ground/rock underneath. London, New York, Dubai etc. If they can do it for 200 floor tower blocks in muddy, marshy areas without these things all leaning over X months later, then hopefully they can build a 1 level warehouse.

(I had a house once with a solid concrete floor. 100% of the area. With flint stones in it. Super strong. There are surely different designs/options for foundations etc depending on use, subsoil etc).

If they need aggregate then Tungsten West has it to sell, in the south west, HSP doing the work I think ;-).

[smithie6] 21/2/2022 14:35

Apologies, I have deleted that bit. I just thought you were being overly negative, without due reason.

But all comments are useful, we can all learn from the experience/knowledge of others.

[muckshifter] 21/2/2022 14:18

Just a quick response Smithie since you seem to be accusing me of throwing mud, which is not the sort of response you normally make, and disappoints me.

As a young man I worked for the contractor building two sections of the M18, which goes close to the area we are talking about. On one section the actual carriageway was raised over a length of several hundred metres by approx half a metre at mid point to allow for settlement expected from underground mine workings, which I think, but can't remember for certain, were from Maltby colliery. The second section had the longest straight section on the M18, iirc, and after we installed the central reservation crash barrier on that long straight, it looked a fantastic bit of work, perfectly straight and perfect gradient. Less than a year after opening it looked like a switchback.

[smithie6] 21/2/2022 13:38

Interesting.

1) I disagree about the bit about roads to warehouses at the Unity site.
HSP are paying or have paid for a new first road to connect to that area of m2, for the original logistics warehouse.

Was the contract for about £10 million ?

There is obviously no need to build a 2nd road parallel to that first road.
That saves a lot of money.

2) any risk of warehouse subsidence.

It is next to a motorway. A very expensive investment. Many many millions of £.
imo they wouldn't have built a heavy motorway on load if they didn't think it was solid.

You have any data info at all that even hints that there are any mining tunnels close underneath ?
Wiki/internet says that when the mine was created they went down to ~881 yards in around 1916.
"No 1 shaft at Hatfield reached the Barnsley Bed on August 15, 1916, at a depth of 852 yards. It was completed to a depth of 881 yards"

At depths of around 881 yards I don't see any risk at all of subsidence at the surface. It has had since 1916 & as far as I know it hasn't happened yet. Over 100 years ago !. (& anyway. I don't think the mine tunnels are under the logistics area since the coal seam ran south of east from the colliery I believe, while the logistics land is north of east I think)

And the main colliery buildings are 1.5 miles away. Looks like the tailings & stuff were/are near the colliery buildings, logical. Any mounds of 'stuff' have a risk of slides but that has all been sorted I assume but in any case it is 1.5 miles away.

3) completely disagree that the new client will want that saving for themselves. (In fact the price per hectare has gone up I think).

The client will agree a price based on how much he wants to be at that location & how the price compares with other possible sites. How much the seller makes or how much any works costs to get it ready, he doesn't really care imo. He just looks at the end price.

If I go out for dinner I look at the options & pick the one that suites me best. I can not demand a discount & get it from restaurant no. 3 because I know they have a boat & catch their own fish !!

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At this price it is a buy imo.
The risk/reward taking in to account TNAV & earnings is excellent imo. Got nett cash & loads of assets. And notable divi yield & there may be extra payouts (I expect it, from the German JV, see my other posts). What is not to like.
Just a boring job of waiting while it grinds upwards imo. Many PIs prefer loss making cos. doing Covid, oil, gold or pharma stuff. (Recently STX & MCL & SNG & AVCT have taken a beating. Solid finances has many advantages, much lower risk)

DYOR