Paragon Banking Share Discussion Threads

[techno20] 28/5/2011 13:57

Postive Buy recommendation at £1.96 in this weeks IC. Worth a read.

PE of 9 and a Net Asset Value of £2.39.

IC expecting PAG to tap into securitisation this year.


I agree and think it'll be sooner rather than later - assuming the £95m in the pipeline converts at a decent level and speed, they'll have a £100m tranche ready to securitise within a 2-3 months. Hopefully this will improve confidence in the ability to kick start the model again and lead to the discount to NAV reducing.

Think there's also an outside chance of some PE interest moving forward once proof that the "originate and trade" model is operational again.

Short term there's potential to move up towards the £2.50 mark, but longer term the potential is there for significant upside as recognition grows that the UK property market has fundamentally changed and the rental sector is in for long term sustained growth.

[the drewster] 24/5/2011 10:24

Spike on the headlines, but falling on further analysis?

[future financier] 24/5/2011 10:09

Good to see that the Directors have got their priorities right. One of the two reasons given for the increase in Operating Expenses is "an increased charge for share based remuneration". Buit since that does not use up their ever increasing pot of cash - and they are not shelling out to shareholders - maybe they need to increase their remuneration as well?

But the shares still look good for 20% appreciation p.a. for a few years ahead.

[techno20] 24/5/2011 10:00

More glass half full, than half empty on my side.

Drop in provisions good news as arrears continue to be under control, new lending levels starting to move forward strongly after a slow start, new business streams growing with new deals in the offing, positive statement on securitisation potential and NAV up.

If they deliver the same in H2, looks like £80m profit, rather than the £71m consensus.

Looks in pretty good shape to me.

[the drewster] 24/5/2011 08:53

Declining book, results massively bolstered by the huge reduction in provisions, other income down, net interest income down.

Not all rosey. Did briefly breach £2, but I suspect there are many automatic trades set to trigger as and when it does.

[techno20] 24/5/2011 08:37

Great set of results and positive response. Might get to £2 today, especially if we see some upgrades coming through.

[the drewster] 23/5/2011 10:23

you have to wonder whether todays sell off is in any way related to tomorrows announcement arriving at the printers.

It is uncanny how this share moves just prior to each set of announcements following the "buy on rumour sell on fact" paradigm with alarming accuracy.

[sat69] 20/5/2011 23:57

I hope there won't be a sell-off on profit-taking Techno!

[techno20] 20/5/2011 20:27

Paragon hit years' high today - a great sign ahead of the interims on Tuesday.

Net assets are about £2.28, so there's further to go on these. The coverage on CHL seems to have gone quiet which short term takes away the concerns over funding which should be beneficial.

Looking forward to breaking £2 next week.

Techno

[techno20] 24/4/2011 19:17

BUY recommendation in this weeks Investors Chronicle at 165p for anyone who missed it. IC raises the speculation regarding the CHL purchase.

[future financier] 20/4/2011 11:38

PAG has just re-launched the Mortgage Trust brand to try to get some volume albeit at a lower margin.

Techno - I agree about all of the new entrants that we currently know about - but its the unknown ones that could be interesting for CHL. As you say the VC/PE players we need to watch. Isn't JC Flowers in Kent Reliance and with big plans ........... Also given that PAG is at 25% discount to NAV it would require quite a significant discount to CHLs assets to make it attractive to PAG shareholders (although management might be tempted by the lure of having a 50% larger empire!).

[techno20] 19/4/2011 21:02

I'm less convinced about the competition PAG would face on this - yes there are new players entering the BTL space, but they are all pretty small, niche and I doubt would have the fire power to take on a £6bn book. And apart from managing the back book I'm not sure about the infrastructure argument - yes they are managing the back book pretty well and driving down the arrears, but the lending origination capability has long since been closed / mothballed.

In my view we are more likely to see one of the private equity players like Apollo get involved.

Time will tell.

Techno

[future financier] 19/4/2011 09:35

I think that there is enough appetite out there that CHL will attract a full price - particularly if there is a new entrant who wants to start operating in UK BTL. If so they will be prepared to pay a premium to acquire the CHL infrastructure (that would have only limited value to PAG).

On reflection I fear that the price will be too high to make it worthwhile for PAG.

[techno20] 18/4/2011 22:38

FF - agree with you, CHL's a great fit and there's no-one better in the industry than Paragon to extract value by actively managing arrears as they arise. Assume the share price drop is in anticipation of a potential fund raising - could be a good opportunity to top up.

Techno

[future financier] 18/4/2011 10:40

Suggestion in S Times that PAG could buy CHL from the Irish. CHL is a quality business and would fit well into PAG. Will require some new capital in PAG but would be very good for earnings.

May look to buy back into PAG

[the drewster] 21/3/2011 08:35

This could now quite conceivably test 200p on this leg up.

[the drewster] 16/3/2011 16:34

Gone through the support line intraday, but fighting to hold it at the close

[the drewster] 15/3/2011 09:28

Good test of 165 coming up then. If it holds, 180 target fairly short term, if not, I suspect 150 is the next test.

[the drewster] 23/2/2011 08:39

With 180 failing to hold, then 165 ought to provide the next support.

[the drewster] 10/2/2011 19:04

Maybe they can write themselves a few more nil paids for the fact the buy to let market has grown so robustly?

[slopsjon] 10/2/2011 18:33

The buy-to-let market grew by 7% in 2010, according to the Council of Mortgage Lenders (CML), as loan performance improved strong rental demand continues.
There are 1.3m buy-to-let mortgages worth £152bn and that accounts for 12% of the whole mortgage market. The value of lending in 2010 rose 22% to £10.4bn, with the average size of the loan increasing to more than £100,000.
Home buyers' are finding It difficult to raise the size of the deposit they require to buy so this is increasing demand for rental properties. The buy-to-let market will continue to benefit from this.
Rising interest rates remain a potential danger, as does the potential for rent arrears.
Buy-to-let lender Paragon has expanded its product range in an attempt to gain market share in the are of small-scale landlords. Paragon returned to the buy-to-let market in September.

[jgpgw] 07/2/2011 12:54

Afternoon all,

Paragon's AGM is on Thursday, have a look at this thread if you are planning on attending:



John

[the drewster] 03/2/2011 12:32

About time we found out how good a support level 180 is going to provide.

[the drewster] 28/1/2011 08:25

Not entiorely sure what Paragon diamonds has to do with a buy-to-let mortgage specialist to be honest (well I do, but I was being polite)