Persimmon Share Discussion Threads

[1 nhs] 04/4/2020 10:17

In a depression families move into one house to slash costs .

Since few will be paying their mortgages, the last thing a bank wants to lend against is another new house.

Without debt ( mortgage ) your average house falls from £300,000 to £85,000.

You buy house builders at the bottom of the cycle, not the top

[dr_smith] 04/4/2020 10:14

Even in economic downturn people have to live somewhere.
If they don't buy in spring, they will tend to notice where they are and not forget about it.
Where to live in not a transient seasonal wish.
Also, renters will be acutely aware of paying out dead money every month.
If demand, as in the need for somewhere to live, is a constant and supply goes down, common sense dictates the outcome.
IMO
Dave

[adamb1978] 04/4/2020 09:58

Hi Porsche

I somewhat agree with you. I went through the housebuilders last week and there were only 3 with cash balances of more than 20% (or was it 25%?) of their annual opex. Lots had very little or net debt, so might well need to raise equity at some point given the market will be dead for a while or wont be in a good position to rebound when conditions do indeed pick up.

PSN is the one which I'm looking at for the rebound, but at much lower prices than today. I dont the market is remotely factoring in the economic damage which the virus is causing - housebuilders are losing their important spring season too. I'm expcting UKX to go through recent lows and down to 4500ish, but then cyclicals getting battered more.

[porsche1945] 02/4/2020 16:34

@dr smith

Actually house builders are not particularly cash rich. Berkeley Gp best placed, the others will burn through theirs (if they have it, Redrow for starters has non, nor CN and TW not much) in a couple of months. The other side of this CV bore will be a recession and the UK already in poor shape compared to the other G7 countries becos of the brexit sxxtshow. So it will be long and painful as always with the UK self harmers. These are heading back to a fiver.

[1 nhs] 02/4/2020 07:44

This is cars.


Same for House builders

-Car production forecasts from the Society of Motor Manufacturers and Traders (SMMT) have suggested that UK auto output will fall by 200,000 to just below 1.1 million, because of plant shutdowns caused by Covid-19. This represents an 18% fall in output this year.

The forecast fall is based on the length of plant closures so far announced by the big assemblers, which have shut down given a collapse in demand, supply chain disruption, and to keep workers safe in line with the government mandating that all ‘non-essential’ work should stop.

These existing shut downs will have a major impact on auto firms. Jaguar Land Rover (JLR), for example, has stopped production for a month in the first instance, through to 20 April. Ignoring a planned Easter shutdown, JLR would have produced something in the range of 30,000 to 35,000 cars in that period.

Let’s say that the value of those cars would be roughly £40,000 each (depending on the model mix and degree of options loaded onto cars) – that gives a lost value of output in the range £1.2 billion to £1.4 billion just for JLR alone.

While there would be some reduced costs in terms of components, there would still be a high degree of fixed costs. And JLR – like other auto makers – may well be shut down for longer than a month. In that case the predicted decline of 200,000 units for the year could be a best (or least worst) case scenario.

There are other reasons why the forecasted drop of 200,000 may be the least bad scenario. For example, we don’t know what will happen to demand for new cars when the crisis recedes; with unemployment spiking many in society will be facing a financial squeeze and could postpone spending on big ticket items like cars for some time.

And as I’ve noted before, as assemblers shut down, orders for component manufacturers dry up and there is a cascade effect on the supply chain. Supply chain firms have also shut down.

[dr_smith] 01/4/2020 16:20

I see the FTSI and most constituents down several percent.
I was going to say it's likely unit trusts and the like with holders having to sell them in absence of dividend income, but looking at volumes (source - google finance) the volumes are 33% to 66% of the average, so seemingly not that, but a low volume selling day.
IMO
Dave

[32campomar] 27/3/2020 07:51

Redrow in talks with bankers to secure extra lending to see it through this period.

[dr_smith] 26/3/2020 09:09

Help to buy is to assist home buyers, not related to how HB conducts its finances.
HB's at the moment are cash rich, they don't need gov help and gov have stated, they are there for support after normal channels exhausted (e.g. call on shareholders, bank loans etc).
CV or no CV it is normal business practice to be conservative, only give away spare cash. Cash rich co's across the FTSI are cancelling divs, purely to protect against the unknown.
In say 6 months time, co's will review and if the unknowns can become quantifiable, excess funds can be released for divs as some have already said.
IMO
Dave

[sogoesit] 26/3/2020 07:23

House builders are reliant on government help-to-buy.
It is therefore my guess that there is an ulterior motive to cancelling the dividend. That is that, when (not if) they do seek some form of support from government, they can say "we're not throwing our cash out to shareholders".
The airlines have tried it and UK and US said no. The US has said no support especially if buybacks are going on.
This is a different world.

[effortless cool] 25/3/2020 17:36

It's the smokers wot die first, however (pre-existing conditions).

[mwainw1973] 25/3/2020 11:11

I'm pretty sure they would have taken advice before doing it as to the legalities so likely good is they can do it but who knows

[dr_smith] 25/3/2020 11:09

I agree Eeza in expectation "Once XD it should be paid, imo." so my question is, what is the legal process/timing. Is it legal to withhold now.

[eeza] 25/3/2020 10:57

Well the thing is, Dave, s/hlders take the hit at XD & not when they receive the Div.
They have already lost the Div.

Once XD it should be paid, imo.

[dr_smith] 25/3/2020 09:43

Cupra. I won't shoot messenger, answered with good intent.
Whilst understand the need, I too am surprised the legal cut-off is after the ex-div date. I would expect the need for external input to action at this stage - such as court order, EGM etc).

Given many PI's are pensioners reliant on their gov endored SIPP and the like, many are reliant on divs for living. I normally disregard divs, looking at cap growth comcined with any div payment, taking the view I can always sell shares if I need extra cash.

To sell wgen share price deflated to around half of "normality" would not be sensible, so divs are all the more important to be received. I'm OK but I can see it being a problem for many.

To be fair, it is normal conservative practice to retain spare cash for risks, in this case known in nature, but not in extent.

As said in rns, it can be reviewed later.


Googling I found this :
"The company has a legal responsibility to pay the dividend once it has been declared. This date is used to determine who is on the share register and therefore entitled to the dividend. The company sets the date of record after it has announced that it will pay a dividend."
Though cannot see same in the link it gives:


Here I see record date was 5/3/20:


I therefore believe the questions stand:
1) At what date does legal right pass to shareholder.
2) Was PSN past this point.
3) If past this date, did they obtain legal ratification.

I'd go easy on them though, in their shoes, there is much to consider with little time.

IMO
Dave

[mwainw1973] 25/3/2020 08:57

Yes they have ?

[eeza] 25/3/2020 08:26

The stock dropped at XD - s/hlders have already lost the equiv of the Div - will it be marked back up.

Lol !!!

Once XD it should be paid, imo.

[tenapen] 25/3/2020 08:09

That is fair enough in these troubled times !.

Im guessing they can take back the fat cat bonuses that have just landed into thier bank accounts ! fairs fair.

Regards.

[32campomar] 25/3/2020 07:55

They can unfortunately it's happened with a number of other stocks this week

[plasybryn] 25/3/2020 07:50

How are they allowed to cancel the £1.25 special dividend which went ex dividend on 5th March payablec2nd April? Surely once ex dividend it cannot be cancelled?

[bashor] 25/3/2020 07:20

Dividend gone here too

[cupra kid] 24/3/2020 21:10

Doc.I can confirm that Persimmon staff have also received their bonuses despite the current pandemic.