Savills Share Discussion Threads

[dasv] 11/9/2007 08:21

Slogsweep - It could be well timed in a way. US residential property has already taken a huge hit - perhaps Savills got Granite for a bargain price.

The interims look impressive to me considering the prevailing sentiment regarding property and liquidity.

But the use of the phrase "cautiously optimistic" reflects the uncertainty Savills has about achieving its expected full year figures.

To offset that, they have increased their dividend: "The increase reflects our
continued confidence in the performance of the business"

I ask myself, if they have continued confidence, then why use the phrase "cautiously optimistic"?



"* Group revenue for the six months was up 35% at £284.2m (2006: £211.1m).
* Group profit before tax increased 7% to £33.2m (2006: £31.0m).
* Underlying Group profit before tax* increased 27% to £32.5m (2006: £25.6m).
* Basic earnings per share increased 3% to 17.8p (2006: 17.2p).
* Adjusted underlying basic earnings per share* increased 25% to 17.4p
(2006: 13.9p).
* Interim dividend increased 20% to 6.0p (2006: 5.0p)."

My concern is next year:- it's the outlook that is driving down the property and financial sectors not past figures.

On the other hand as I said about 5 months ago on this thread, I'll believe in the impact of high interest rates on revenues at Savills only when I see it. So far we haven't seen it.

[slogsweep] 11/9/2007 07:28

Results OK to me. Expansion to US looks ill timed but not justifing this price happy to top up at these levels

[jockthescot] 10/9/2007 13:55

Interims out tomorrow - any views?

[dasv] 31/8/2007 07:40

Substantial bounce from 420 or so to 499 today. This is roughly the share price level last September. It will be interesting to see where the market takes it from here. Since my last entry I substantially reduced my holding by trading hard and tight during the recent fall. I am still overall in loss since the spring, but have recouped well. I still hold a chunk in my PEP. I have grave concerns over the US property sector and can see the disease spreading to UK shores. Although supply in the US vastly outstrips demand in most of the country. In the UK the situation is different, although I see the current economic situation on borrowed time with a service economy propped up by record borrowing and a debt mountain bigger than the entire country's GNP. There have also been news stories recently suggesting that the stock market turbulence recently has negatively impacted deals in the luxury home market in London with Humberts and Savills admitting things had "slowed" and it was "too early to call the market". This to me was a sell signal, so I sold another £10k on Tuesday. Would have been nice to have left it a few days in retrospect.

I will read the forthcoming interims with interest as they may point to the impact lower yields on commercial property, general uneasiness about making deals, lowered city bonuses, and more lending restrictions have on Savills' bottom line. However the real impact will probably felt in the next 6 months.

[dasv] 17/8/2007 11:57

Just seems like hundreds of PI's. Each sale is tiny but there are so many.

I expect when the tide comes back in, institutions will make a quick buck exploiting this fear.

Still, a stop loss at 390 seems in order.

6 analysts all with add or buy ratings

Detailed Broker Forecasts 2007 2008
Date Rec Pre-tax EPS DPS Pre-tax EPS DPS
Oriel Securities 16/08/2007 BUY 81.0 45.4 17.0 86.0 49.1 18.0
Panmure Gordon 16/08/2007 BUY 80.0 39.1 18.4 85.7 41.4 21.1
Arbuthnot Securities 13/08/2007 BUY 81.5 45.0 19.2 85.8 49.1 22.1
ABN AMRO 06/08/2007 ADD 81.0 45.3 18.0 85.0 47.3 20.0
Numis Securities Ltd 04/07/2007 BUY 79.8 42.2 18.5 85.0 44.9 21.0
Charles Stanley Securities 09/05/2007 BUY 80.0 44.5 18.0

[dasv] 17/8/2007 11:42

a nice exit point would have been at 514.

This is not the best day in the past 2 years to get a good price for your savills shares though this has not deterred people from dumping them.

In at 429

[rafieh] 17/8/2007 10:14

Going down the drain.

[dasv] 13/8/2007 17:39

Great recovery for SVS share price today. 12% up at close. Looks like we have a return to support levels of 500 on the cards.

[dasv] 10/8/2007 17:59

US Fed steps in. US fears allayed. Credit crunch looks unlikely:-

[dasv] 10/8/2007 15:07

spoke too soon - down to 445 now. Savills succumbing to the market's panic.

[simon gordon] 09/8/2007 13:47

Hi dasv,

You will note that the p/e the company was on when the thread started in the header = 5.4x

All the property agents are getting pounded and are heading to sub 10x.

I just think this is a risky share because the earnings are cyclical and barriers to entry are pretty low.

Savills are an excellent firm.

If commercial property rolls over then the share will fall and right now the market is starting to discount this - I don't know enough aboutthe property market to give a sound judgement but I sense it will slow after such a good run.

[simon gordon] 09/8/2007 12:50

Looks like its heading to four quid. Cyclical business with strong need for property transactions. Will the liquidty crunch and rising interest rates scupper deal flow?

[cockneyrebel] 09/8/2007 12:13

Shorters in the sector all driving these stocks down while there's fear in the market imo.

Watch for a massive short covering rally at some point imo

CR

[hufhaus] 09/8/2007 11:06

I'm listening too dasv, albeit still an ex-holder of these. Thanks for the post.

[cockneyrebel] 09/8/2007 10:46

I'm listening dasv and I think you are right.

Lots of stuff getting oversold now - the fact is the average investor doesn't understand where this sub-prime debt lies and so they sell anything that's falling because they think if it's falling it's affected! Self-fulfilling!

I picked up SVS yesterday and today on the falls. London property is still racing, far east is strong and the recent trading statement from SVS was very upbeat.

Buy the misplaced fear of others imo.

CR

[dasv] 09/8/2007 10:22

more than a month on and savills's share price has taken a beating. As I write the share price is 488p. Since my last post Savills as acquired Granite: a New York property investment bank oriented to commercial property.

The subprime crisis is leaning heavily on all real estate stocks at present, and chairman Aubrey Adams acknowledges the threat subprime represents but is bullish long term about Granite and Savills' prospects.

The acquisition coincides with turmoil in U.S credit markets triggered by a collapse in the subprime mortgage sector. Some market commentators have said that the subprime crisis will reduce demand for direct investment but Adams was optimistic Savills Granite would not suffer.

"I think we're all concerned about subprime but the underlying factors in the commercial real estate business haven't really changed. There is still a lot of money out there. The U.S is still a very active market," Adams

The likelihood however is that the share price will remain depressed until the extent of the impact subprime has on companies is known.

Market sentiment weighs against savills but the current fundamentals look solid. PE is now 10 and dividend yield is about 4%.

With a 7% drop these past few days, an entry point to buy in looks increasingly attractive. Though I know nobody on advfn is listening ;)

[dasv] 21/6/2007 11:13

london and associated properties (LAS) and humberts (HUM) also taking a beating today 5% a piece - looks like the fall is due to likely rate increases by BofE MPC:-

"BoE Governor Mervyn King warned on Wednesday that underlying inflationary pressures have been disguised by volatile energy prices, suggesting he still sees the need for higher interest rises."

[dasv] 21/6/2007 11:03

With recent slamming of share price down to 586, PE now an undemanding 13.66, Dividend next year estimated at 3.5%. I reduced 50% recently, but still hold a good chunk in my PEP.

Actually looking quite attractive in some ways though dark cloud of property crash hangs over the company. I'll believe Savills is affected by property downturn when I see it until then I'll hold on to my reduced holding.

[dasv] 16/6/2007 10:51

too many flats being built and not enough houses:-




Not sure I agree:-

"If things do not change, the consequences could be dramatic. The National Housing and Planning Advice Unit, which launched last week to help make homes more affordable, predicts that unless more houses are built, prices by 2026 could be 10 times the average buyer's salary, up from current multiples of around seven. Stephen Nickell, chairman, says: "Existing building projections indicate that affordability will continue to worsen. While we could see a short-term fluctuation in prices, in the longer term all areas of the housing market are going to get yet more expensive unless more homes are built."

Prices have gone up because of a speculative bubble in buy-to-let which has been allowed to develop through an increase in the money supply. The likely outcome is not prices at 10x salary in 2026 but amateur buy-to-let landlords scrambling for the door in an effort to dump their flats at the top of the valuation curve. Of course few will exit in time and there will be a glut of rental properties on the market reducing prices.

It is well documented now that rental yields have not kept pace with house prices and this is symptomatic of the fact that property to rent is in plentiful supply while certain properties to buy are not.

How this affects Savills is another matter. Firstly Savills is involved in many other activities other than residential property. Secondly the types of property Savills sells are mostly areas where there is currently a shortage of supply.

My current thinking on the share price is that a P/E of 14 is fairly priced considering the likely growth rate of the company and I do not forsee stratospheric upside.

After a vicious drop below my average price of 609p I am back in profit and may choose to exit and find a safer home for a large chunk of my ISA equity.

I still think the company is sound and profits will be inline with expectations. However I can't see the rest of 2007 and 2008 being a period of great expansion for the group.

[dasv] 12/6/2007 12:36

ftse100 fallers today (my guess is that SVS's fall today relates to poor HBOS mortgage lending figures plus inflation worries and increase of cost of borrowing:-

"Among blue chips, HBOS was the biggest casualty falling back 48 or 4.49 pct at 1,022 after the UK bank's claim that its share of total net mortgage lending in the first half will be below 10 pct disappointed the market.

This morning the UK's fourth-biggest bank said it is on course to meet market expectations for a 10 pct increase in full-year underlying earnings per share to 110.8 pence. However, it also said its share of total net mortgage lending in the first six months of the year will be below 10 pct, down sharply from its normal 15-20 pct range.

In reaction, Panmure Gordon cut its price target for HBOS and lowered full-year estimates. Hichens Harrison cut its recommendation to 'add' from 'buy'.

Its peers were also lower: Alliance & Leicester fell back 25 at 1,102, Northern Rock was down 34 at 992, Royal Bank of Scotland fell 12-1/2 at 647 and Lloyds TSB fell 4-1/2 at 567-1/2"