Share Name Share Symbol Market Type Share ISIN Share Description
Home Retail LSE:HOME London Ordinary Share GB00B19NKB76 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 159.70p 0.00p 0.00p - - - 0 06:36:16
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Retailers 4,234.7 -840.3 -104.2 - 1,299.07

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spob: 12 Jan 18 Financial Times Good times draw to close for UK housebuilders Slowing property prices and easing of government schemes increase pressure on sector Housebuilders outperformed the wider market in 2017 but signs of margin pressure are surfacing © FT montage / Bloomberg Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save to myFT Aime Williams in London 8 hours ago 16 While booming house prices have led to fretting politicians and unhappy millennials, they have meant UK housebuilders have mostly been on a roll. Since the financial crisis, the share prices of companies such as Barratt Developments, Taylor Wimpey and Persimmon have risen fast, as demand for newly-built properties has been fuelled by an unprecedented run of affordable mortgages and flagship government schemes such as the Help-to-Buy equity loan programme. Meanwhile, the price of land — one of housebuilders’ most significant costs — has been relatively low, growing more slowly than house prices, according to data from Savills. In 2017, shares in the UK housebuilding sector outperformed the broader market by about 30 per cent. But there are signs the bright picture might be about to darken, as slowing house-price growth and rising costs put a squeeze on profit margins. “The hugely favourable pricing environment [housebuilders] have had since 2012 until now is going to be gone,” said Robin Hardy, an industry analyst at Shore Capital, who forecasts flat profits for the sector “at best” between now and 2020. “There is no problem with demand for homes — there’s a shortage of housing. But if there’s a 3 per cent fall in the price of the wider market, there will be a 3 per cent fall in the new build market. It’s all to do with price.” The chief executives of Taylor Wimpey and Barratt Developments, two of the UK’s three largest housebuilders, both said this week that they expected slowing house-price growth over the next year, agreeing with data from lenders Nationwide and Halifax. Most housebuilders also estimate that costs, including material and labour, will rise by 3 to 4 per cent over the next year. Companies have warned policymakers about a shortage of skilled labour for years, and the situation is expected to be exacerbated by Brexit. This double whammy of rising costs and slowing prices would make it “hard” to increase profit margins over the coming year, said Charlie Campbell, an analyst at Liberum. Richard Watts, a fund manager at Old Mutual Investment Management, explained that while he did not think 2018 signalled “the beginning of the end of good times” for the sector, he accepted conditions were changing. “House-price inflation will be lower than . . . in recent years, so that is a bit of a slowdown,” he said. However, he still expected modest margin expansion over the next year. Share prices of some of the British housebuilders were hit this week when two of the biggest companies reported lower forward sales, excluding joint ventures — a metric measuring how many homes have been reserved by buyers but are yet to be built. Taylor Wimpey and Barratt said the fall was down to an increased pace of production, which accelerates completions. Mr Hardy said all housebuilders were trying to reduce how far in advance they took orders for homes in an attempt to ensure they handed homes over to customers at the agreed date. He added that it was therefore “very difficult to know” if falling forward orders signalled any problem with future demand. “They told us they were going to do this and the shape of the forward sales matches what they said they were going to do.” Mr Watts added that he was “sitting tight . . . fairly relaxed about being in these stocks,” and that the recent share price volatility reflected the high expectations set by the sector last year. “They’ve come out this week and trading is in line with expectations, so there is no incrementally good news, if you had to pick holes,” he said. Mr Campbell at Liberum agreed that markets had grown accustomed to “big” upgrades to earnings forecasts from analysts, which were missing from this week’s trading updates. The uncertain future of the government’s Help-to-Buy scheme is also beginning to weigh on the minds of housebuilding chief executives, who have so far been left in the dark about the future of the scheme. The government has committed cash to Help-to-Buy until 2021, but after that housebuilders are unclear whether policymakers will choose to continue the scheme in a reduced form, or to cut it off completely, which would risk suddenly curbing demand for their homes. “The expectation is that all the good times will carry on forever, and 2018 will be better than 2017, and 2019 will be better again,” said Shore Capital’s Mr Hardy. “But it’s possible we’ve just had the peak.” This article has been amended since publication to clarify that the fall in forward sales at Taylor Wimpey and Barratt excluded joint ventures. Copyright The Financial Times Limited 2018. All rights reserved. Read next fastFT Barratt Developments lifts rate of house building on robust demand Lombard Matthew Vincent Housebuilders in good shape despite January wobble UK housebuilding UK housebuilders take blow as price growth slows Special Report The Business of Formula One New Formula One owners need to attract larger audience Follow the topics in this article United Kingdom Financials UK Companies COMMENTS (16) Sign in Please keep comments respectful. By commenting, you agree to abide by our community guidelines and these terms and conditions. We encourage you to report inappropriate comments. Newest | Oldest | Most recommended Mike Nolan 2 hours ago Aw yeah nah need more cash in hand ReportShare RecommendReply Partial_Witness 1 hour ago @Mike Nolan What's this supposed to be - how builders talk, or working-class people in general? ReportShare RecommendReply Ed Banger 3 hours ago "Builders have been warning policymakers about the lack of skilled workers for years." Perhaps the builders could recruit and train people themselves? Just brainstorming here. ReportShare 5RecommendReply Bananalyst 3 hours ago We're coming up to the 5 year anniversary of Help to Buy being introduced, this is when those loans become interest bearing. So we will soon see whether the scheme has been a success, or whether those people that took out Help to Buy loans are heavily in debt. ReportShare 3RecommendReply RiskAdjustedReturn 1 hour ago @Bananalyst Remarkable frankness in wiki: "Help to Buy is the name of a government programme in the United Kingdom that aims to transfer wealth from the public to politically connected house builders.[1]" ReportShare 1RecommendReply Absolute Zero 1 hour ago @RiskAdjustedReturn @Bananalyst Hilarious ReportShare RecommendReply Baggers 4 hours ago Help to Buy has undoubtedly helped the house builders but low interest rates have done far more to fuel this house price rise and hence builder’s profits. A fact conveniently overlooked by those of the left persuasion sniping at the Tories. ReportShare RecommendReply Blackbag99 4 hours ago @Baggers I am not a big fan of the current scheme. I don't think house building really needs this constant tinkering. It bit like telling a child to stop picking at a scab. That said this housing market hasn't been accompanied with a rampant expansion of household debt, which made the recession so deep. Household debt is elevated (the definition of household debt is probably wrong as investment mortgages skew the numbers), but debt to GDP has been pretty stable. There are some left wing foil hats scream at the dangers. PRA seems to be working well, a huge plus for the BoE so far. PRA is particularly boring, but then that is exactly what I it should be. ReportShare RecommendReply Bananalyst 3 hours ago @Blackbag99 @Baggers That household debt will skyrocket with rate rises, combined with falling house prices, we have the makings of a significant crisis. ReportShare 1RecommendReply RiskAdjustedReturn 3 hours ago @Blackbag99 @Baggers "but debt to GDP has been pretty stable." The risk is from that portion of GDP which is really just borrowing in disguise. When Greece stopped borrowing, their GDP suddenly fell around 25%. ReportShare 1RecommendReply Blackbag99 4 hours ago It's quite natural for this stage of the cycle. Although I would say there has been solid price growth its a long way from booming. If you look at price adjusted for inflation it is still way below trend. I think the likely outcome is builders will slow building of new houses. If there really was a need, let alone a crisis for availability, they would just keep building. At least for once there is lower investment froth, so will probably be much more organised than the past. ReportShare RecommendReply Seaofdebt 5 hours ago 'Share prices of some of the British housebuilders were hit this week when two of the biggest companies [Taylor Wimpey and Barratt] reported lower forward sales' Extact from Barratt's trading update yesterday. 'Forward Sales Our total forward sales (including JVs) as at 31 December 2017 were up 2.0% on the prior year ' Am I missing something here or is this bad reporting or fake news? ReportShare 3RecommendReply Partial_Witness 2 hours ago @Seaofdebt There's really no either/or about fake news or bad reporting here - the FT have had a constant and repetitive slew of negative spin on the sector lately, usually based on innacurate or misleading information. I suspect the motivation (rather than short-selling) is either generalised misdirected millennial grievance on behalf of the journalist, or an easy appeal to the echo chamber of unfocused politically-based comment you tend to find around this area of the page. To be fair, Lombard had a more reasonable take on it a couple of days ago, but in this piece, in terms of useful information for investors, there just isn't any. ReportShare RecommendReply Sharlene Goff FT 54 minutes ago @Seaofdebt Thank you for the comment. While you are right - the company's statement reported a 2 per cent rise in overall forward sales year-on-year - that included joint ventures. Without those, and looking at the metric most commonly used by analysts, the company disclosed a 0.2 per cent decline in forward sales. ReportShare RecommendReply T B Hall 5 hours ago The £800m bonus pot just distributed to the Persimmon senior management team should tide them over until the government comes up with its next moronic scheme to pump prices ReportShare 18RecommendReply Prags 5 hours ago The Tories am sure would come up with another moronic scheme to use taxpayer money to subsidise profits of the house builders. Shameless opportunists like Osborne have no morals
tradesmarter: The offer has not changed, the rise in the sbry share price has improved our offer...breakdown as follows 55p cash x 0.321 sbry share (our share price will mirror sbry movements to an extent now)...the special divi and final divi worth approx 28p.……so at current sbry price offer stands 90p (2.80x 0.321)per share plus 55p cash =145p offer add on special divi and final at 28p…... price around 172{ to market due to no 100% guarantee....we need sbry to get over sticky resistance area 282-285 soon or price will fall back. For now still risk of sbry dilution to fund the buy and dividend payments not 100% guarantee....hence discount to market price, I'm thinking we will be in the 161-175 range for the dip applies And profit taking likely over 170 my best guess...good luck
imperial3: In the final analysis,I must admit cash is far better,than shares.If the offer is more shares,then you have to consider the outlook for the Sainsbury share price.If you believe they will reach 300p,then yes,the share price option is favourable.If you think that the share price will fall back below 250p to say 200p,then it is an open and shut case for cash.In this environment,I prefer the cash element.Just my view.
jonny33: I want to speculate about the future and especially the 24p per share return to shareholders. 1. Lets assume the Sainsbury's bid does not go ahead - Then I believe the share price will drop back to around £1.20, it'll hold this price until the Homebase sale is ratified by shareholders and the special div (24.6p) is paid. At which point the share price should drop by c24p to just under a pound. 2. Lets assume Sainsbury's successfully strike a deal, the share price will move to the agreed price....but now it gets complex, what happens to the share price once the special dividend is paid? I'm really looking for some guidance here as either way there is a big movement in the share price about to take place, which to a certain degree is predictable and has the potential to allow some money making opportunity if it's worked out. I'm interested to hear peoples views, especially if you have come across this type of scenario before.
jonny33: This looks like the cause of the wobble just now FT Alphaville today BE Anyway, HOME a bit weak this morning. PM hxxp://www.theguar...eam-football-story BE Some talk around among the short sellers this morning, which as absolutely not been backtested, to be clear. BE The idea being that Sainsbury will bid again, but it's likely to be an incremental bump rather than a knockout. BE And HOME would struggle to accept an incremental bump. PM hmm Real time stream connected. New messages will appear here the moment they are published. BE Note the HOME short interest, though. BE PM 8% or so BE Yup, still nearly 9% of free float. There's a plenty to be made from spreading bear stories. BE Anyway, let me get Haitong BE Tony Shiret, who absolutely hates Argosbury. PM does he now BE Or Argbury. Perhaps that's better. BE Clearly the only things that can save Home Retail (HOME) as an independent company now would be pressure on Sainsbury (JS) (SBRY LN, 236p, Neutral, FV 235p) management not to proceed to make an offer, or a derisory low-field price. For Sainsbury CEO Mike Coupe either would represent a significant personal blow and we would expect management to be even more determined to continue despite the almost universally negative response to his proposed strategy. The HOME team’s surprise move to sell Homebase to Wesfarmers of Australia does raise the question of whether the subsequently de-levered Argos rump could be taken private, which we examine in this note. However, our main finding having done this work is that divisional profits as shown by HOME may have been boosted for Argos by re-allocation of Financial Services EBIT and that this undermines the overall valuation. Our FV rises to 135p from 95p. BE We have tested the various elements of Buy-Out arithmetic here. Private Equity could generate significant returns if the Argos Transformation Plan is successfully delivered in private ownership. But this is based in part at least on the starting point of very low profitability, which both highlights the risks involved for PE and limits the leverage a private vehicle could support initially and hence the exit price for HOME shareholders. Any consideration of the exit value of Argos must also be based on assuming that the Argos business model – which we believe has become more dependent on the contribution of consumer finance – is sustainable in private ownership (see below). As part of this exercise we have also had a much closer look at the composition of profits as stated by HOME. We believe that the Financial Services (HFS) business achieves far greater profits than stated and that these are re-allocated to Argos (mainly) and Homebase. We have estimated that over half of current year Argos EBIT is in fact re-allocated HFS profits, suggesting that the erosion of product based profitability has been greater than investors would generally believe. (We have received no co-operation from HOME in our analysis which incorporates a number of assumptions which may limit the accuracy of our conclusions.) The implication here is that Argos needs the support of a consumer finance structure to sustain its operations. BE Having performed the analysis we feel that there is a bit less to HOME than meets the eye. While HOME management may be motivated to offer for Argos, we believe that the valuations of Argos and HFS have to be considered together by investors rather than assuming a separate valuation for HFS based on its debtor book, because the returns implicit in a separate valuation of HFS would effectively be double-counted as its profits are mainly shown currently within the Argos EBIT. We assume that Sainsbury has probably done the same work we have managed in a couple of days over the last six months. So we would expect that it does not want to double-count assets either. This said the logic of its approach eludes us so its valuation is likely to as well. BE Canaccord also advising caution into the deadline. PM Hang on PM We assume that Sainsbury has probably done the same work we have managed in a couple of days over the last six months. PM That's a bit cheeky no? PM But go on PM Canaccord BE Similar conclusion, slightly more tame argument. BE With the clock ticking down to the 5pm deadline on 2 February (or potentially later if agreed by the Takeover Panel), by when J Sainsbury has to decide whether or not to make an increased bid for Home Retail, the answer should soon become clearer as to whether Argos is to continue with its Digital Transformation plan as an independent operator or (potentially) as a subsidiary of J Sainsbury. Home Retail is currently just over three years through its five-year plan, so it is a case of unfinished business at this stage. This will, of course, be dependent on a number of factors. First and foremost is whether Sainsbury does return with an enhanced bid. Assuming it does, we must see at what level this is pitched and whether shareholders are willing to accept this. In turn, this may depend on the mix of cash and paper offered. Given Sainsbury's own travails and challenges in its core grocery market, we would assume that the higher the mix of cash over paper, the higher the chances of success in securing Home Retail's shareholders' agreement. BE The market is not privy to the level at which Sainsbury's rebuffed offer last November was pitched (although press speculation centres at around 130p). There have been three key events since then - the proposed sale of Homebase to Wesfarmers for £340m (c 42p per share); a further profit warning from Home Retail; and market weakness and volatility. These will all play a part in Sainsbury's thinking for what it views as both a "strategically compelling transaction" but also "not a must do deal". As the potential bidder, it is only Sainsbury's (and its shareholders') view on the strategic compulsion of the transaction that matters. We do not have adequate insight into Sainsbury's strategy to comment in an informed manner, but it is clear from some of its published materials that the company (and its advisors) are serious in their deliberations and justifications on this matter. This has certainly changed our initial scepticism on the probability of a higher, follow-up approach. BE As long-term observers of Home Retail, we remain less convinced of the strategic logic and rationale of such a deal. However, just as beauty is in the eye of the beholder, value is in the eye of the bidder. Our analysis of the value of "rump" Home Retail, excluding Homebase at a £340m value, shows that any bid for the total group above 135p values this rump at a premium to the wider sector, compared with the 13% discount Wesfarmers has proposed to pay for Homebase. Only a "strategically compelling transaction" could justify that in our view. BE In light of our 10% forecast cuts following Home's Q3 IMS and some sector de-rating, in the absence of a bid approach we would have cut our fundamental valuation to 100p (from 115p). Ascribing a two in three chance to a bid at the current share price and a one in three chance of no further - or failed - bids, in which case fundamentals would re-apply, this gives our new target price of 134p. We therefore retain our SELL recommendation. BE All of which plays into the bear stuff above rather neatly. BE There's a quite startling disconnect between what the buyside says HOME is worth -- remember the flush of "we won't sell for less than 200p!" articles a while back -- and the value the sellside sees in the business. BE One can be cynical about both sides, of course. Though only the former is talking its book. 11:38AM
dangersimpson2: 25p is the return to shareholders. Of the proposed payment of £340m for homebase £75m will be eaten by seperation costs and is effectvely lost to the group. The rest adds value to the remaining group by strengthening the balance sheet and reducing the pension deficit. So this should be considered as £265m = 33p value to HOME not just the £200m = 25p proposed return. Homebase sale also reducing the lease liability. When we add in the £550m = 69p net loan book which is essentially just a receivable then you get 102p. The offer then depends on the valuation of the Argos trading business plus cash net of it's pension liabilities. Cash is £193m Pension deficit £100m (will be reduced by £50m but we have already counted that above.) Provisions £191m - being conservative and assume none of these are transferred with Homebase. = -£98m = -12p Overall then 90p + Argos. (Shows what a good but this was sub £1.) HOME trading (in a poor year) at c.£100m PBT. Homebase sale likley to reduce profit by c.£20m giving £80m PBT or £64m PAT = 8p. In a good year I expect them to do at least twice that = 16p. A 170p offer from SBRY would be paying a 10x net bad-year multiple or 5x good-year multiple. A 210p offer would be a 15x net bad-year multiple or 7.5x good-year multiple. So even a 210p offer would not be that crazy given that SBRY trade on a fwd multiple of 11, HOME consistently generates higher OCF than earnings, the deal could be debt funded to reduce tax and the potential synergies that have been detailed. Execution risk has reduced with the sale of homebase. I'm not expecting taht SBRY will go as high as 210p (not without a counterbid anyway) but on balance of probablities it would seem worth them table a higher offer than the current share price.
jonny33: I have a theory and this may come across as the ramblings of a lunatic so bear with me. What do we know as facts We know Argos have piloted some stores in Sainsbury's We know some members of Home retail and Sainsbury's boards have worked for each other companies. We know Home retail share price is too low and in danger of a take over We know there are take over rumours about Home and Homebase. Here is a theory Suppose the pilot stores have proven to be successful for both sainsbury's and Argos. Suppose Sainsbury's has seen a small % increase in spends due to the increase footfall from new Argos customers, Suppose you multiplied this growth across to lots of sainsbury's stores. All of a sudden you have a strategic business partner who can bring you growth for little cost. Now if Amazon took over Home and we know Amazon are now playing in the food market would they want Argos stores in Sainsbury's? - I don't think so. So how do you make your strategic growth 'partner' less attractive to take over.....I'll let you join the dots.
market sniper1: Home Retail Group Plc 56% Potential Upside Indicated by Nomura Posted by: Ruth Bannister 7th December 2015 Home Retail Group Plc with EPIC/TICKER LON:HOME has had its stock rating noted as ‘Reiterates217; with the recommendation being set at ‘BUY’ this morning by analysts at Nomura. Home Retail Group Plc are listed in the Consumer Services sector within UK Main Market. Nomura have set a target price of 170 GBX on its stock. This would indicate that the analyst believes there is a potential upside of 56% from the opening price of 109 GBX. Over the last 30 and 90 trading days the company share price has decreased 2.7 points and decreased 52.7 points respectively. Home Retail Group Plc LON:HOME has a 50 day moving average of 121.35 GBX and a 200 day moving average of 154.35 GBX. The 52 week high for the share price is currently at 219.38 GBX while the year low share price is currently 96.7 GBX. There are currently 815,092,075 shares in issue with the average daily volume traded being 3,805,945. Market capitalisation for LON:HOME is £893,340,902 GBP. Home Retail Group Plc is a United Kingdom-based home and general merchandise retailer. The Company’s segments include Argos, Homebase and Financial Services. Argos is a digital retailer, which sells products through its 755 stores, Website and mobile applications.
jonny33: <<> When two businesses work in collaboration eg Argos and eBay or Argos and Sainsbury's it takes time to build the relationship and understand how the benefits can be maximised and risks overcome, there is a lot more to come for next year. ;) The problem with Homebase has been no investment, this is still a challenge when they are only making £20m profit a year, something simple like new functionality in IT can costs millions, and that comes from the profit line. However you have to invest in order to grow so it's a tricky situation, but most important is having a vision, sadly Homebase has not had this, it is unsure of it's place in the market, eg it tries to sell Homeware and compete with John Lewis and Ikea, but also sells DIY and compete with B&Q/Wickes, it sells kitchens and competes against Wren/B&Q/Wickes/John Lewis/Independents. gardening is pitched against independent garden centres and chains like Dobbies....the list goes on. Which begs the question what are Homebase known for? If you can't answer that question eg known for product x or known for price or value or quality then you have just discovered what the problem is with Homebase, it's not known for anything and is jack of all trades and master of none. If you look at AO (Appliances on line) they are known for price and speedy delivery. John Lewis for quality of service, Ikea for simple design at great prices. Homebase has lost it's way and unless they can come up with a plan will continues to be lost. Lets hope the new CEO has what it takes. As for Argos it know's what it want to be and has a plan which it is executing, there are speed bumps along the way but assuming it does not get derailed in two years time we'll look at today's share price as a great buying opportunity.
masurenguy: Predators plot £1bn takeover bids for troubled Argos owner PRIVATE EQUITY firms are considering £1bn takeover bids for the owner of Argos and Homebase. Several retail industry figures have been asked to advise on approaches for Home Retail Group (HRG). Buyout houses are understood to be circling following a slump in the company’s share price and an unusual pre-Christmas profit warning, which it blamed on uncertainty surrounding Black Friday promotions. HRG’s share price has halved since the start of the year and closed at 103.4p last week, valuing the business at £849m. It has £193m of cash on its balance sheet and a customer loan book of £550m, according to interim results released last month. Investment banking sources suggested this buffer would make the company appealing to bidders. However, they cautioned that buying HRG could still be akin to “catching a falling knife”. Argos and Homebase are saddled with big property estates and have been hit hard by the shift to online shopping. Complete article here:
Home Retail share price data is direct from the London Stock Exchange
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