Paragon Banking Share Discussion Threads

[woodcutter] 24/8/2016 10:58

Read across the OSB H1 results today, both are still very much undervalued and i continue to hold. The market has behaved completely irrationally on both these stocks and the challenger bank sector in general, they're still way undervalued even after the recent rise imv.

I expect a small pullback at some point and then we'll be off again as we lead up to the next TS's.

woody

[future financier] 23/8/2016 13:34

Agreed - but even if this delivered very little you would still be getting a yield of > 4% - and that's ok by me in the current environment.

[the drewster] 23/8/2016 12:25

The Bank, and how it progresses, will be very key to growth (in profits) in the next 1 to 5 years I suspect.

[the drewster] 23/8/2016 11:22

Possibly because of the uncertainties introduced by the chancellor's attack on landlords (and buy to let in general) and Brexit and how that might affect the BTL market and indeed the housing market.

[shaker44] 22/8/2016 17:07

445p this time last year. Not sure why their long term value would be so much less now? even the pessimistic liberum has them as a buy with a taget of 348p. barclays are more pessimistic though!

[the drewster] 22/8/2016 16:39

I may have agreed at 240p (undervalued) - less convinced now.

[shaker44] 22/8/2016 15:51

Still look undervalued to me. But we will all find out when the full years are out in November

[the drewster] 22/8/2016 12:39

c.£47m spent on buybacks since 1st Dec so that activity could cease to underpin the price short term. Tread carefully.

[shaker44] 22/8/2016 10:18

Another 100k buy back on Friday making over 14m/42m by value now. Puts a floor under the share price and underlines that PAG were oversold after new BTL taxation last April. People have to live somewhere and many many have to rent as they can not get on housing ladder.
Very hapy to sit on these now.

[expletive deleted] 29/7/2016 07:16

Very encouraging announcement this morning. Still hanging on in here.

[the drewster] 20/7/2016 09:58

Since Dec1 buyback started, the market cap has been as high as £1,166m and as low as £652m (currently around £773.5m)

H1 profits were up 12.5% on 2015 to £71.9m, and FY 2015 reported a £134m group profit, EPS of 35.5pps, and Cash/Cash Equivalents of £1,056m.

There's also a near 5% dividend.

Clearly on some metrics, the business looks cheap - but I believe quite a severe property downturn is priced in for now which I can see happening and that prevents me from playing another tranche now the price has recovered from the lows.

[davebowler] 19/7/2016 13:47

Latest Buyback;
Date of purchase: 18 July 2016

Number of ordinary GBP1.00 shares
purchased: 120,416

Highest price paid per share: 273.20p

Lowest price paid per share: 268.10p

Volume weighted average price
paid per share: 272.0633p

[davebowler] 15/7/2016 11:51

Uncanny how the chart is halting at an invisible line drawn from the 2009 and 2012 lows.

[the drewster] 15/7/2016 08:10

Still about £11.5m in the buy-back kitty by my reckoning.

About 12.4m bought since 1st Dec '15, at a cost of £38.488m (average price thus c.£3.08)

[davebowler] 14/7/2016 11:13

13 July 2016

The Paragon Group of Companies PLC:

Transaction in own shares

The Paragon Group of Companies PLC (the "Company") announces that it has purchased the following number of its ordinary shares of GBP1.00 each on the London Stock Exchange ("LSE") from UBS Limited ("UBS") as part of its buyback programme announced on 24 November 2015.


Date of purchase: 13 July 2016

Number of ordinary GBP1.00 shares
purchased: 150,000

Highest price paid per share: 256.40p

Lowest price paid per share: 250.20p

Volume weighted average price
paid per share: 254.4441p

[davebowler] 03/7/2016 09:47

Mentioned here

[future financier] 01/7/2016 13:58

Both of them sold exactly 47% of their allocation i.e. sufficient to pay tax at 45% and Employee NI of 2% when this falls due. So entirely rational - albeit it would be nice to see them taking on board some of the risk that the rest of us do.

[the drewster] 01/7/2016 13:39

Directors selling at £2.42 hardly inspires confidence, even if they were given them for nil consideration.

[the drewster] 01/7/2016 08:47

Dividend (forecast) hits 6% at 220 ... interesting play at some point.

[woodcutter] 30/6/2016 11:12

XD today so a small drop expected.

I posted this on the OSB thread and re-post here as i own both stocks.

The whole challenger bank sector is being totally misjudged by investors on the basis that if house sales diminish it will hurt the sector. It may well hurt the builders but interest on existing loans still needs to be paid. Much depends on how interest rates move and the effects on NIM for the challengers and this has to be balanced with the potential effect on the exchange rate for the £gbp. So i figure there'll likely be no immediate moves on interest rates. Clearly there's concern over impairment and foreclosure but this appears way over done to me.

There's too much negativity on the likelihood of impairment charges in the event of a downturn in the economy. We have the highest employment figures we've had for years and even allowing for any restrictions on migrants as a result of an EU deal on trade there'll still be BTL growth to accomodate those who need homes.

The larger banks are also very much aware of the encroachment of the challenger banks on the SME loan sector and it is going to get much worse for them.

The current per ratings are ludicrous based on forecast eps.

OSB
forecast eps 39p
sp 197p
per 5
equity to loan book percentage 6.2%

PAG
forecast eps 40p
sp 250p
per 6.25
equity to loan book percentage 8.9%

ALD
forecast eps 26p
sp 121p
per 4.65
equity to loan book percentage 8.6%

SHAW
forecast eps 31p
sp 170p
per 5.5
equity to loan book percentage 11%

VM.
forecast eps 31p
sp 242p
per 7.8
equity to loan book percentage 5%

The most important metric imv is the ratio of equity to loan book value as it gives you some idea of the impairment required to wipe out the shareholder equity. You also need to consider the LTBV of the loan book in many cases this is as higher than 50% so any assets reclaimed at foreclosure have siginifcant value attatched.

aimho

woody

[the drewster] 30/6/2016 08:48

Consensus ....??

26 May: JP Morgan Cazenove today reaffirms its neutral investment rating on Paragon Group of Companies (The) PLC (LON:PAG) and cut its price target to 360p (from 380p).
27 May: Numis today downgrades its investment rating on Paragon Group of Companies (The) PLC (LON:PAG) to add (from buy) and set its price target at 355p.
6 June: Jefferies International today reaffirms its buy investment rating on Paragon Group of Companies (The) PLC (LON:PAG) and cut its price target to 475p (from 536p).
29 June: JP Morgan Cazenove today downgrades its investment rating on Paragon Group of Companies (The) PLC (LON:PAG) to underweight (from neutral) and cut its price target to 230p (from 360p)

[the drewster] 30/6/2016 08:42

Interesting Market Cap compared to cash and cash equivalents!

[woodcutter] 25/6/2016 11:17

The downside risk is the level of equity against the asset base, if you consider it a risk at all, which i don't.

total equity is £964m
total assets are £12846m

percentage equity to assets 7.5%

So if you believe Brexit is going to cause finacial chaos and PAG is likely to have borrowers in trouble and consequently have to make provisions for bad debts equivalent to the equity then it's high risk. In essence 7.5% of loans need to foreclose.

As the vote was pretty close I happen to believe the negotiations of our Brexit will be compromised and to all intents and purposes we'll be "out" but "in" with a watered down loose arrangement where we're effectively still part of the EU. A little like Norway.

And sadly "call me Dave" will have resigned unnecessarily.

Unlike the builders who may witness a slow down in their build program to reflect demand (unlikely), PAG will continue to generate revenue through remortgaging etc although the loan book growth may well be curtailed. If you're patient PAG will provide dividend income and capital growth over the longer term.



aimho

woody