Osb Share Discussion Threads

[onjohn] 16/3/2023 08:00

bad debt roofing it

nderlying loan loss ratio of 14bps and statutory loan loss ratios of
13bps (2021: -2bps) reflected the worsening economic outlook, including
the potential impact of higher cost of living and borrowing on
affordability.

[t-trader] 16/3/2023 07:58

Yes great results and your probably right jonnybig…̷0;may top up if it does go down

[jonnybig] 16/3/2023 07:56

Excellent results. Probably will still fall though in this insane market.

[petewy] 27/1/2023 19:56

Yes banks were featured in the IC Lloyds etc but no mention of OSB and ARBB

[riverman77] 27/1/2023 17:37

OSB is one I hold in the background but don't tend to pay too much attention to it - pleasantly surprised to see how much it has shot up recently, but still seems to be on a cheap valuation (around 6x forecast earnings according to Stockopedia, and just above book value).

[apple53] 27/1/2023 11:13

thanks for highlighting that. I was wondering why the move, despite recent grinding upwards. Metro has been moving also, and Virgin had got ahead a bit.
STB not moving....

[thamestrader] 27/1/2023 10:10

looking nice.
PAG had a decent update today, maybe a read across to here?

[aishah] 03/11/2022 11:19

Talintyre sold 150k@604.5p back in April. Directors have cashed out approx. 50% of their exercised options throughout this year.

[future financier] 03/11/2022 08:52

Haven't seen the the MW article - but forget the "specialist residential" - BTL is > 90% of the loan book. Historically BTL has had a lower default rate than residential so whilst there will undoubtedly be an uplift in impairments this should not be too heavy. My only concern is that this will be the first time that OSB has been exposed to stormy market conditions so, unlike PAG, we do not know how effectively they will perform.

[masurenguy] 03/11/2022 07:17

OSB (LSE: OSB) is a lender specialising in professional buy-to-let and residential mortgages. The group is one of a handful of so-called challenger banks that emerged after the financial crisis. With a market capitalisation of around £1.8bn, it is relatively small compared to the big high street banks, which means it tends to fly under the radar of most investors. Its size has not held it back. Since 2016, the group’s loan book and value of customer deposits have nearly quadrupled in size. Meanwhile, operating profit has increased from £163m in 2016 to £465m.

As profits have grown, OSB has been able to return more cash to investors. Its dividend per share more than doubled between 2016 and 2021 and is expected to hit 35p in 2023, giving a projected dividend yield of 8.3% on the current share price. Shares in OSB are also selling at what appears to be a dirt-cheap multiple of just 4.5 times forward earnings and a price/book (p/b) ratio of below one.

The stock has been under pressure recently following the now-defunct mini-Budget at the end of September. As a specialist mortgage lender, OSB is highly exposed to higher mortgage rates and possible defaults if borrowers are struggling to meet their repayments. It seems likely the business will have to deal with loan losses as interest rates rise, but it should also benefit from higher interest rates.

The company reported a net interest margin (the difference between the rate it pays to depositors and charges borrowers) of 302 basis points in the first half of 2022, up from 268 basis points in the same period last year. As this margin expands, it should feed through into OSB’s bottom line. On top of its rising profit margins, OSB also has a healthy balance sheet with a tier 1 equity capital ratio (a measure of banking solvency) of 18.9%. That’s far above the regulatory and industry minimum which averages the low double-digits. As dividend stocks go, OSB appears to tick all the boxes."

Moneyweek: 2 November 2022

[pj84] 15/8/2022 20:38

Shore Capital: OSB valuation is ‘inappropriate’
Shares in challenger bank OSB (OSB) are ‘materially undervalued’, according to broker Shore Capital.

Analyst Gary Greenwood retained his ‘buy’ recommendation and 800p ‘fair value’ target price on the group previously known as OneSavings Bank, which was trading 2.1% higher at 589p on Friday afternoon.

The group reported rising profit growth in the first half of the year, boosted by rising interest rates and a growing loan book.
‘OSB shares are broadly unchanged year-to-date and currently sit 10% off their 12-month high,’ said Greenwood.

‘Our current fair value of 800p offers 46% upside to the current share price. OSB is a very solid business that is delivering a sector-leading return on equity despite being extremely well capitalised. In this regard, we view the current stock rating as being totally inappropriate with the shares materially undervalued at the current level.’

Greenwood added that management acknowledged the uncertain outlook but is ‘confident in the prospects for the group nonetheless’.

[km18] 15/8/2022 14:09

OSB Group encompasses departments focused on mortgage lending, residential development, funding lines and asset finance. As a result, the firm developed multiple sources of income, hence enabling profit after tax to be forced up to £208.9m in 2022 from £161.5m. The surge in profitability was explained by the organic growth in loan order book, resulting in a higher net interest margin of 302bps, above the 268bps produced last year. Subsequently, equity leapt to £2,093.7m from £1,775m in prior year caused by higher retail deposits. Furthermore, net cash significantly soared to £276.2m from (£166.7m), signifying that the firm funded operating, investing and financing activities effectively. This plausible supporting evidence was efficiently incorporated into the firm’s EV/EBITDA of 17x, thus capturing intrinsic value. The cash hike was simultaneously reflected on the solid P/B of 1.28x, above peers. Given the equity spike, a conservative dividend policy was implemented to reward shareholders for their initial capital invested, illustrated by the robust dividend yield of 5.39%. Despite favourable financial prospects, the security is undervalued, shown by the relatively low P/E of 6.5x, below the financial sector P/E of 17x, hence the stock is expected to surge in value.

Brief Analysis:

Profit after tax of £208.9m, above last year.
Net cash of £1775, rallied from prior period.
EV/EBITDA of 17x, higher than sector benchmark.
P/E of 6.5x, below industry threshold.
Dividend yield of 6.5x, higher than last year.
Interest rate margin of 302bps, above last year...

...from WealthOracleAM

[petewy] 11/8/2022 08:48

Good set of results

[apple53] 30/5/2022 16:40

So if I can raise some more cash (eg if some of my dogs can recover a bit) do I buy more OSB or STB? #

Looks to me like OSB has repurchased about 5m out of c. 18m shares. The 18m estimate assumes average price c. 556p.

Strangely, on a glance at a few sample days, it looks like they were buying more shares per day at higher prices (eg 570p), but hopefully that's just unlucky sampling.

They seem to be buying about 10% of the visible market volume.

At the pace so far they can keep this up til at least the end of the year, while based on the smaller repurchases of the last few days they could do it for years. Someone needs to ask the company about this. Are they getting cold feet and hoping to find an excuse to keep the capital?

[william127] 27/5/2022 14:52

To make a liar out of meDIRECTOR/PDMR has bought shares to the value of wait for it £1,778.46 ?

[william127] 27/5/2022 07:57

OSB offers best of both worlds for jittery investors.Investors Chronicle article today. Agree with most but no idea how they have "Negligible dividend yield" I have it at 5% not 1%.My only negatives are the Directors sales and lack of chat on this board. But very efficient banking model and just well run.

[petewy] 11/5/2022 08:25

Massive hits here

[apple53] 23/3/2022 21:35

Marketscreener forecasts for 2022 duly upgraded 20%!! (68.2 to 81.2, so 19%). 2023 upgraded less. A bit more nervous about STB given the 12-13% jump in a week, though still think it's worth £20. Expenses may continue to disappoint the market, offsetting small revenue upgrades from new lending. Headline eps not that relevant as mostly about impairment charge/write-backs. Like OSB could take a while (if ever!) for the market to realise it's a growth stock. Less resilient than OSB, however, due to Cost income ratio (conversely more operating leverage to revenue growth).

[riverman77] 17/3/2022 11:42

As I expected, very solid results (although as you say market seems surprised). I hold this and Secure Trust - specialist lenders with high margins, good growth prospects and very cheap.

[apple53] 17/3/2022 11:38

About the results themselves, the only cause for surprise is that the market seemed surprised (no I'm not sure how much of the jump this morning relates to the buyback).
Undercovered company in a poorly understood sector creates double opportunities.
I did force myself to sell some low beta stocks to buy big banks on the day of the big fall (monday 7th), and as they bounced I was shifting them into OSB. Though I stupidly switched some into Secure Trust two days ago, as I wasn't really aware of OSB's results date. I will admit to taking some profit today, but I really had an over-sized position.
If the LSE website records all the volume, the buyback is 2 months volume. So thinking about it I really shouldn't have sold anything at all.

Underlying eps running in the high 70s (I am taking their 86p underlying and assuming 20bp bad debt charge).
So Marketscreener-recorded forecasts need a 20% upgrade for 2022 and somewhat less for 2023.
This is a growth company, so on even a modest growth multiple it's worth a tenner.


Next one to surprise us is Secure Trust.

[petewy] 17/3/2022 09:27

Well buyback makesa difference

[apple53] 06/3/2022 20:43

Drop even more overdone now. Demonstrates the indiscriminate selling of financials. I wish I had cash. I had sold a little mid £5s and bought back around 5 so remain fully invested.

[gp1948] 01/3/2022 16:24

Picked up a few OSB this afternoon. Drop overdone today?