Savills Share Discussion Threads

[cerrito] 09/1/2008 08:34

Daily Telegraph's take on things
quote
Savills surprised the market yesterday with news that it would beat expectations for 2007. Given how far those expectations have narrowed since the summer, that need not be difficult.

The market has battered Savills' share price as transaction volumes dried up in the wake of the credit crunch and a general pessimism engulfed lenders. In the past 12 months, the stock has more than halved in value. Chief executive Aubrey Adams said yesterday that people were in danger of talking themselves into a gloom.

Given recent figures showing commercial property values down several per cent every month since October, you'd be forgiven for thinking they'd already done it.

So is Savills' view that the market will start to recover after Easter a plausible one? The company's high-end residential business has remained strong and its overseas operations are continuing to perform. Despite signs to the contrary, Adams says, trading has not ground to a halt and deals are still happening.

There is also a strong possibility that the Bank of England will cut interest rates again, preventing the housing market crash so many have predicted.

Like other stocks, Savills now looks ridiculously cheap at 6.2 times earnings forecasts for this year.

But the problem remains that things are going to get worse before they get better and Easter is not far away. This year's projections for commercial property deals, which account for half of Savills' turnover, are below those in 2007 and the prevailing gloom is proving hard to shift. There appear to be few catalysts for a revaluation of property-related shares.

When the low point comes there should be plenty of time to catch the ride up again. But confidence will take time to return.

[dasv] 08/1/2008 23:05

Indeed Cerrito, looking at the DOW tonight, market panic is all too likely.

It remains a solid company which will ride out the downturn. The share price though is not guaranteed to rise before this happens.

I will be monitoring this company throughout 2008 but prefer at the moment to have a weighting towards gold and oil rather than property.

For what it's worth, last weeks moneyweek tipsters were pushing German, France and Japanese property plays as being high yielding and undervalued.

I still hold First State's Asia Property Fund (since April 2007 - this has fallen about 10%). This despite a rising Yen.

[mike24] 08/1/2008 23:01

yorkshire bank are offering commercial loans
FROM base rate + 2.5% + 1.5% arr,fee how on earth
can comm, be an investment at 4% over base,
residential then wait for outcome of CFC
ramped svs 2yrs ago

[cerrito] 08/1/2008 21:51

I thought about buying today but have not done so.
I am surprised by the enthusiasm of the three analysts...I am not sure I would put it as a sell and while am comfortable that it will get to 310/300 at some point this year if only temporarily any talk of doubling is misleading.
The trading update told us what we suspected- that Asia doing well and giving opportunities in fund management, consultancy and Europe doing OK, but a large part of their UK/US business has an uncertain future.
The wording they used for facilities management which should be recession proof was to me ambiguous and certainly more downbeat than how they described consultancy.
Let's remember that UK transactional operating profit was £17.1m out of a total of £31.7m in the first half 07; indeed of this £31.7m operating profit all but Asia £5.5m and Europe's 0.4m came from the UK.
Indeed operating profit in Asia only grew from £4.3m in H106 to £5.5m in H107.
A key to understanding what is going on is to get a feel of the £57m bonus/commission earned in H107..how much is really variable?
I note the Oriel Securities man is giving them a 6.2 dec 08 pe which is of course attractive but would be interested in knowing how he gets there.

In summary am indecisive..would have thought too risky to short..we have pretty much reached the bottom now but just as I can see it going to 300 on a temporary basis i still think we will have a week of general market panic when you will be able to pick up at 230 odd.

[jonwig] 08/1/2008 12:06

Will short-sellers and analysts agree that Savills has bottomed-out?
By Rob Mackinlay

Savills, the property services company, has seen its share price rise by 5.9% today, up 14.25p to 254.25p, on the back of a positive trading statement.


However, even with today's rises, Savills is down more than 60% on 2007 prices which broke above 700p in April at the peak of the commercial property market.

The share price declines have naturally attracted interest from short-sellers. In May 2007 less than 1% of Savills stock was on loan, according to figures from Euroclear. By July 2007 this had doubled to 2.26% and the level of stock lending – the only indicator of short-selling – has gradually risen to 5.18% in November and stood at 6.42% in December.

Today's statement has prompted ABN AMRO analyst, Richard Rae, to upgrade Savills to "Buy" saying: "While the sector newsflow is likely to remain very poor during the next six months, we think the shares are quite capable of doubling over the coming year."

The note says: "Asia and the Far East have remained very strong (with no signs of slowdown), and the group's consultancy business there has benefited from high levels of corporate activity (property valuations for IPOs and fund launches etc.)."

Rae says: "The focus for investors is totally on 12/08 of course: Savills is confident on Far East and Services, and we upgrade again here, but we now take a much more cautious view on UK transaction markets, and assume UK commercial / residential profits halve to £18m."

Mark Young, analyst at Oriel Securities, said that today's positive statements and 2007 outperformance hung on H1 not H2 possibly prompting the note's title "that was then, this is now".

However Young gives Savills a "Buy" recommendation saying: "Given that Savills' shares fell by some 59% in 2007, underperforming the wider property sector by 33%, much of this newsflow appears to be priced in (our new December 2008 PE is 6.2x), and thus we stick with our BUY recommendation."

Nan Rogers, analyst at Arbuthnot also gives a "Buy" recommendation with a 350p target price, and is impressed that 2007 will be ahead of consensus forecasts saying: "This is particularly impressive given today's news report that the value of transactions in the UK fell from £15bn to £5.5bn in the third quarter."

She also high-lights diversification achieved in 2006 with 20% of operating profits from commercial transactions, 26% from residential and 22% from consultancy. She agrees with Savills that the credit crisis will not hit residential property as hard as commercial property.

[jockthescot] 08/1/2008 09:26

P.S - Congrats on new thread. Looks good!

[jockthescot] 08/1/2008 08:56

Views on update?
Mine is that cautious confidence shone through, but crystal balling is necessary for 2008.

Jock

[pizza3] 08/1/2008 07:48

Savills sees FY results slightly ahead of expectations




LONDON (Thomson Financial) - Property services company Savills said it
expects results for the year to end-December to be slightly ahead of
expectations, after a good performance in consultancy, property and facilities
management, and financial services helped offset a weakening in commercial
markets towards the end of the year.
Trading conditions in commercial investment markets, particularly in the UK
and US, have been "challenging" in the last few months, the company said.
Tenant demand for commercial property in the UK and across Europe remained
steady for most of 2007, it said, but the credit squeeze constrained volumes in
UK and European investment markets in the second half.
The company's residential business, however, remained resilient, it said,
with prices at the top end holding up better than in lower-priced markets.
The outlook for the UK and US commercial investment, UK residential and UK
mortgage broking businesses will depend on how quickly confidence returns to
financial markets, it said.
However, Savills said its businesses in Asia and Europe appear less affected
by the credit squeeze, and it expects continued progress in consultancy,
property and facilities management, and fund management.

[pizza3] 08/1/2008 07:09

time to buy



RNS Number:2660L
Savills PLC
08 January 2008

SAVILLS PLC
("Savills" or "the Company")

Trading Update

Savills, the international property services company, is pleased to announce a
trading update for the year ended 31 December 2007 prior to entering the close
period before the announcement of the full year results, which are scheduled for
release on 12 March 2008.

Overview

2007 has been a record year for Savills with the business benefiting from its
diversified activities and international presence. Trading conditions in many
commercial investment markets, particularly in the UK and US, have clearly been
challenging in the last few months. Our Residential business, however, remained
resilient. Other areas of our business, most notably consultancy, property and
facilities management, financial services and fund management, together with our
transactional businesses in Europe and Asia, have performed well.

Overall, we expect our 2007 full year results to be slightly ahead of
expectations.

Main Business Streams

Transactional

Tenant demand for commercial property in the UK and across Europe has remained
steady for most of 2007. In the UK and European investment markets, following a
strong first half to 2007, trading volumes in the second half have been
restrained by the credit squeeze.

The prime UK residential markets have proved more resilient to the credit
squeeze than lower priced markets. Whilst the stream of negative news coming
from the financial sector affected prices and volumes in the final quarter,
prices at the top end remained relatively firm.

In Asia, the property markets remain active and demand for residential and
commercial property in Hong Kong and Singapore has been strong. Australia has
also benefited from increased demand for property assets as the inflow of
institutional money continues amid a shortage of stock.

In the US, our new Savills Granite business has performed in line with our
expectations and integration is going well.

Consultancy

Our Consultancy businesses across the Group have performed well. Demand for
services such as planning and valuations has been at record levels. Planning is
a long lead time business and the doubling of our planning staff numbers in the
UK has resulted in an increase in new instructions. In Europe we have continued
to build successfully our Valuation business.

In Asia Pacific, demand for IPO and other forms of institutional listings has
resulted in an increased demand for our valuation and consultancy services.

Property and facilities management

Our Commercial Property Management businesses have benefited from organic
growth, acquisitions and key staff recruitment. Our European business was
strengthened by the acquisition of a dedicated property management business in
Germany.

During the year, our Asian Property Management business has sought to focus on
higher margin business and continued to grow as we improved the quality of our
instructions and our service delivery. Our Asian Facilities Management business,
Guardian, had a record year, winning new contracts in Hong Kong and Macao.

Financial Services

We continued to grow our Mortgage Broking business with recent office openings
in Cardiff and Jersey and further openings planned for 2008. The credit squeeze
has had an impact on the main residential mortgage broking division but this has
been partially offset by increased referrals from our residential agency
business and improved performance in property insurance broking and commercial
debt broking.

Fund Management

Cordea Savills performed well in 2007, launching a Pan-European fund plus four
market and sector specialist funds. We have also now entered Asia with the
establishment of an Indian joint venture and the launch of our first Indian
fund.

Outlook

Over the past years we have invested in broadening and deepening the business
and Savills benefits from being a well-diversified group both by business line
and geography. The outlook for our UK and US commercial investment, UK
residential and UK mortgage broking businesses will inevitably depend on how
quickly confidence returns to financial markets. However, our transactional
businesses in Asia and Europe currently appear less affected by the credit
squeeze. We look forward to continued progress in our consultancy, property and
facilities management and fund management businesses.


Contacts

Savills 020 7409 9923
Aubrey Adams, Group Chief Executive
Mark Dearsley, Group Finance Director

Citigate Dewe Rogerson 020 7638 9571
Sarah Gestetner
George Cazenove

[pizza3] 08/1/2008 07:08

time to buy


HONG KONG (XFN-ASIA) - Share prices finished the morning session higher led by mainland banks after China Merchants Bank projected 110 pct growth in 2007 net profit, triggering hopes of similar earnings from others in the sector.

Dealers also noted bargain-hunting activity in large-caps China Mobile, HSBC, China Life and Hong Kong Exchanges and Clearing (HKEx), while property stocks were mostly firmer on hopes of further cuts in US interest rates.

Cathay Pacific was up ahead of a China Eastern Airlines (CEA) shareholder meeting to vote on CEA's proposed stake sale to Singapore Airlines (SIA) and Temasek Holdings.

Cathay said it will consider teaming up with Air China and its parent for a potential strategic partnership with CEA if the SIA-Temasek deal is rejected by CEA's minority shareholders.

The Hang Seng index ended the morning up 283.34 points or 1.04 pct at 27,462.83.

Turnover was 68.45 bln hkd.

"Market sentiment improved after select China stocks rebounded from their recent dips following a couple of positive earnings guidances" for 2007, said Castor Pang, a strategist at Sun Hung Kai Financial Group.

China Merchants Bank said it expects to post a 110 pct year-on-year growth in its 2007 net profit based on preliminary figures.

China Coal Energy also forecasts a 89 pct growth in its 2007 net profit compared with 2006.

However, "the market is likely to remain volatile in the near term as investors keep an eye out for upcoming key US economic indicators," he added.

The market is waiting for US November pending home sales and November consumer credit figures due to be released tonight.

[grigor] 07/1/2008 22:13

Wait till 2009

[jockthescot] 07/1/2008 18:04

HI Simon,

Agree with you, but I do feel that this has now fallen almost 70% from highs and although may fall further, the time to buy is when people fear the worst. With interest rates due to fall (oil price permitting) we could be close to or near some form of bottom I think.

Can you post link on this thread if you start new one.

Jock

[dasv] 07/1/2008 16:39

As you say simon, brutal. So brutal I even entertained the idea of taking out my first short - if you can't beat them join them. However I think this is almost as risky as going long. I have no position on this stock from last week luckily. Nothing is safe these days - even the diversified miners have been hammered today. Even gold stocks are down.

[simon gordon] 07/1/2008 15:51

This is now getting brutal.

SVS is my preferred pick when I think the UK commercial property crash has abated.

It is the premier UK agent with global growth ambitions.

The yield is very juicy.

It could go as low as £1.50 intraday.

If you are all cool I will start a new thread with more links and better charts?

[cerrito] 06/1/2008 22:36

slogsweep

would be surprised if there is a divi cut in the next 6 months though it is possible albeit unlikely that the new ceo may want to do this when he takes over in may

their website does trumpet deals being done over the last rather dead 30 days in NYC, Paris and stockholm and some deals in the UK but have no feel as to the profitability of these

[jockthescot] 06/1/2008 19:30

Hi DJalan,

Could you put a daily tick chart in?
Thanks
Jock

[pillion] 04/1/2008 13:00

Jockthescot

Re header

Tell me what you want and I will edit

The 30 and 100 moving average lines have been quite good as indicators

djalan

[slogsweep] 04/1/2008 11:35

Divi now nearly 8%. Any danger of a cut?