Mj Gleeson Share Discussion Threads

[wooster4] 07/10/2022 16:44

Fixing mortgage rates below base rates - what planet are you on. Interest rates merely reverting from the artificial lows that they been at for the past ten years.

[disc0dave45] 07/10/2022 15:59

As previously posted (465) Truss needs to do something to fix mortgage rates below base rates, particularly for first time buyers, as well as taking onboard rental payments when lenders evaluate mortgage applications. Hopefully it will come as the government have always supported the house building sector.

[disc0dave45] 23/9/2022 13:14

Stamp duty threshold raised to £250k and £425k for first time buyers - with other house builders average prices being above even this raised threshold then stamp duty will still apply, but not for GLE.

[disc0dave45] 21/9/2022 10:55

Liz Truss may cut stamp duty. Guess less beneficial for GLE as their average house price is a lot lower than others and falls in the 2% duty range. But for first time buyers every little helps.

[disc0dave45] 20/9/2022 18:33

Liberum on GLEThe market is wrong not to set MJ Gleeson (GLE) apart from its housebuilding and regeneration peers, according to Liberum.Analyst Charlie Campbell retained his 'buy' recommendation and target price of 830p on the stock, which fell 2.7% to close at 477p on Friday.The group reported full-year earnings per share grew 34%, as it sold 10% more homes at 15% higher prices.'Demand for its low-cost homes remains robust and this will continue as its homes are 40% cheaper than peers and it is cheaper to buy than to rent,' said Campbell.'We nudge up 2023 estimates and expect profit growth as outlets increase and demand holds up.'He said this made the market 'wrong not to differentiate MJ Gleeson' from its peers 'as demand will hold up better at low price points, especially in the north where affordability is much less stretched'.'We see over 80% total shareholder return upside to our target price,' he said.

[tudes100] 19/9/2022 05:23

GLE HTB % of home sales; 2021 69%, 2022 53%...currently tracking below 50% according to Chairman. He suggested in the recent FY results webcast that only 5% of their customers needed HTB to actually buy one of their homes so it was welcome but nothing like as essential as it might be for other HB's.

[disc0dave45] 17/9/2022 16:15

"old like to get a handle on what % of their sales are reliant on Help to Buy."At their interims in Feb it was 55%, down from 69% the previous year. In their recent finals they said help to buy was 53%. They also said though that 74% of sales were to first time buyers.Whilst help to buy ends next year, applications close at the end of next month. So will Truss announce next month that she is going to extend the scheme?.

[disc0dave45] 17/9/2022 16:01

No problem.Meant to add also that IMO Truss will want to help first time buyers, so she may extend the help to buy scheme (due to end 31st March 2023) as well as encouraging fixed mortgage rates below base rate, and/or make mortgage lenders take onboard current rental payments when assessing mortgage applications - helps all house builders but again more so for GLE.One downside risk though is if they extend once again the fire safety cost issue, believe it was originally 15 years which didn't impact GLE but moving to 30 years has meant a £12.9m, if it's pushed to 40 years what would that mean?. Not saying they will, but clearly it could be significant for GLE.

[essentialinvestor] 17/9/2022 15:40

Thanks Dave, appreciate the reply.

old like to get a handle on what % of their sales are reliant on Help to Buy.

[disc0dave45] 17/9/2022 15:37

EI
From what I’ve read their land costs are a lot lower, they work with local authorities to acquire wasteland / brown field sites thus removing an eyesore as well as providing more housing (guess this strategy and collaboration also speeds up the planning process). They are often the only bidder for this land (get it even cheaper!), they tend to build more homes in the North of England and sell land in the South which has its obvious higher rate of return (operating profit margin for land sales is 29%, nearly twice that of home sales at 15%).
Their homes are all classed as “affordable221; housing (or they were), so no section 106 restrictions as other house builders which again IMO improves the planning process, increases margins and optimises land usage. Their low cost homes attract first time buyers which will have been assisted by the help to buy scheme, and I imagine improve sales lead times.
Just a thought, their average house price figure could be misleading, whilst on paper circa 59% lower than other house builders, it’s their £ per metre squared that would be more useful to me. The average area of a house is about 90m2, but GLE homes could be a lot smaller (guess they are) say 76m2?, they could have less land (gardens) too, combined with generally lower valuations in the North, all skewing their average house price in relation to other house builders (ps don’t know if they give this cost per metre squared anywhere, will have to look). So personally I’m not getting too hung up on the PR in terms of “cheaper homes” per se, whilst in real terms they are but are they in terms of pounds per metre squared (to build as well as sell). Either way they are serving a niche market, will attract more demand due to cost of living crisis, have greater margins and IMO will have the greater shareholder returns going forwards.

[essentialinvestor] 17/9/2022 14:40

Dave, how are they building so cheaply.

[disc0dave45] 17/9/2022 14:37

Just been catching up with Berenbergs downgrades (from buys to holds) for the UK housebuilders issued Monday. It did however upgrade Berkeley to buy, and despite their target price reduction to GLE (from 950p to 680p), it also maintained its buy rating and said it thinks the company will deliver a structurally higher growth rate, alongside its better pricing power versus its peers given its historic under-pricing of the product.
So they only have two buy ratings on UK house builders, Berkeley and MJ Gleeson.
Wouldn’t disagree with their views, GLE has the highest gross margin and the cheapest houses so can easily absorb the potential +5% build cost inflation whilst not hitting their bottom line.

[ghhghh] 16/9/2022 12:06

I suspect been growing too fast and needed quality control catch up.

[disc0dave45] 16/9/2022 09:36

Yeah some fairly bad reviews on workmanship, hopefully they are sorting issues out.Just dipped my toe in. Watch it drop now! Lol

[ghhghh] 16/9/2022 07:42

Gleeson clearly aware of this issue, hopefully now historic

In 2020 we put in place a number of medium-term initiatives to reinforce the operational resilience and performance of the business.

This was underpinned by significant investment across our systems, operating structure and central services. We have completed a major review of our senior management and regional teams. We are now seeing significant benefits from the investment across our Commercial, Customer Care, Marketing, HR, H&S and IT functions. In addition, we have transformed the look and feel of our sites, and have improved the customer journey.

We can always do more but, for now, we have significantly strengthened the business and ensured that it is well-positioned to grow at pace, sustainably.

[disc0dave45] 15/9/2022 18:06

As for trustpilot, thanks EI will take a look. I'm guessing you are saying the GLE reviews look better than some.These days it seems like you get an auto email and a request to make a review which goes onto trustpilot, good or bad I tend to respond.

[disc0dave45] 15/9/2022 18:02

Whilst this is trading slightly above its NAV and tangible NAV, whereas others are slightly below, having had a quick look (a single recent good year 2019) it was trading at nearly three times its NAV historically. Other builders (again only a sample incl TW and VTY) traded lower, max about 2x NAV. Don't really go on the PE for house builders, go on their price to NAV and what they historically trade at - so basically this looks to me like the preferred one.For the record I don't hold, can't force myself to buy when on a decent up day, I'm just tight :)

[essentialinvestor] 15/9/2022 17:28

rogue, perhaps I'm being too cautious (as often the case)..


They have been in business for decades.

[roguetraderuk] 15/9/2022 17:24

EI, i just dont know. history (profits share price performance) suggests its not or hasnt been an issue. a trend is a trend until it isnt. so far it hasnt made a difference across most of the bigger builders. one day that may change. but until it does and you can correlate, im not going to give that kind of thing too much weighting.

[essentialinvestor] 15/9/2022 15:33

rogue, would you discount any potential future liability for quality issues,
beyond the usual "make good" work.

[roguetraderuk] 15/9/2022 15:30

EI, first thing id say is people are more likely to be inclined to hit the internet after a poor experience than a good one and the number has to be taken in context with the amount of other reviews lacking in regards to numbers of houses sold. and the other thing id say is some of the bigger ones you hear only truly awful things yet people somehow keep buying the houses. otherwise i dont know what to tell you. none of them would sell any houses.

[essentialinvestor] 15/9/2022 15:21

Has anyone read the Trust Pilot reviews for Gleeson Homes?.

I don't know how relevant this is but compare Redrow, as one example,
there looks to be very a marked difference.

[roguetraderuk] 15/9/2022 15:12

a year ago the cap was at about 1250 now it will be 2500 less the 550. but the point is less money is in peoples pockets when you add the increased costs of everyday goods, mortgages than a year ago. that has an effect on spending. the government help just stops it being worse. and while i think its going to be enough to avert a crisis things might need to get a little worse before they improve individually (once people start paying those higher amounts). prob from march next year individuals will have seen the worst. how the mkt prices all that time will tell. i dont think theres far to go but certainly some bad corporate news to come which prob pressures share prices. i could be wrong so thats why im not fully in cash. time will tell. imo hbs should outperform into next week. also keep an eye on retailers. they havent moved yet but if the ratio vs ftse starts turning up for them then they might enjoy a bounce too.

[disc0dave45] 15/9/2022 15:01

Yep energy will be about 25% higher for the next two years. But £550 has been, or will be, given to households and about 6% has just been wiped off the BoE peak inflation forecast (energy forecasts were adding at least 6% onto the 13% BoE inflation forecasts). That's a massive reduction in cost of living and significant additional cash in peoples pockets.....to fund a relatively reduced mortgage for a GLE house, particularly first time buyers (GLE builds are on average 50% cheaper than say Persimmons).

[roguetraderuk] 15/9/2022 14:44

disc, because despite the cap, energy will still be many times higher than a year ago. unless your wage has gone up by as much, youll have less to spend. so what this really is doing is just averting a total collapse in consumer spend. which is what a lot were worried about and some started to bet on. overall its good its one less thing to worry about but there still are a few more things which might pressure share prices. but things dont go in a straight line or at least they shouldnt.