Springfield Properties Share Discussion Threads

[davebowler] 23/12/2023 12:25

htTPs://www.stockomendation.com/tips/19-dec-23-russ-mould-the-telegraph-questor-hold-spr-springfield-properties

[alan@bj] 21/12/2023 08:54

A report in The Times today headed “Resilient house prices defy dire forecasts” draws from the ONS figures on housing sales to the end of October. One paragraph states, “Prices fell more sharply in Wales in the year to October, sliding by 3 per cent to an average of £214,000, according to the statistics office. By contrast, the average house price in Northern Ireland and Scotland rose by 0.2 per cent to £191,000.”

[1ups1de] 20/12/2023 10:46

Still a steal @under£1. Improving 24 macros ( interest rates / inflation); sensible debt reduction programme rather than dividend;significant housing supply constraints; substantial land bank undervalued.

[spob] 19/12/2023 20:47

thanks for that

[value hound] 16/12/2023 18:57

Note from Equity Dev't FWIW:

"With increasing visibility of profit recovery and cash generation, we increase our ED Fair Value per share to 130p (from 110p) based on a sector average Price/ Book multiple of 1.0x."

www.equitydevelopment.co.uk/research/increasing-confidence-debt-reduction-on-track?

[spob] 14/12/2023 11:56

Can't ever see house prices falling that much in Scotland. Much more affordable relative to incomes than they are down here in the south east.

[cjohn] 14/12/2023 11:43

This was a really strong update.

Particularly pleased by the mention of further land sales and debt target of 55m by year end likely to be met.

Looks like margins aren't falling further.

And if house prices are stable in Scotland, then a PTBV of 0.5 is very cheap indeed.

[edmonda] 13/12/2023 08:45

"Increasing confidence, debt reduction on track"

New report with audio summary here:

Springfield’s half year trading update (six months to Nov ’23) confirms an in-line performance for H1 and reiterates full year expectations. After a challenging period for the sector, it is a reassuring update, pointing to subdued but stable conditions in Private housing, increasing activity within Affordable housing and clear progress with the Board’s debt reduction strategy.

Recent indicators suggest that the market may be stabilising (notably mortgage approvals ticking up in October as interest rates appear to have peaked) giving us confidence to introduce FY25 forecasts within this note.

Springfield’s shares have recovered somewhat over recent weeks, alongside sector peers, but still trade on just 9x P/E and 0.5x P/Book for FY25. With increasing visibility of profit recovery and cash generation, we increase our ED Fair Value to 130p (from 110p) based on a sector average Price/ Book multiple of 1.0x.

[swiss paul] 13/12/2023 08:25

Steady as she goes albeit with £93 mill of debt - ouch
Trading Update

Trading in line with management expectations - on track to meet debt reduction target



Springfield Properties plc (AIM: SPR), a leading housebuilder in Scotland focused on delivering private andaffordable housing, provides the following update on trading for the six months ended 30 November 2023.

· Trading in H1 2024 has been in line with management expectations

oDemand in private housing remained stable but subdued

oRecommenced signing new affordable-only housing contracts, with c. £24.0m of new contracts entered into

· Two profitable land sales agreed in H1 2024 for a total of £9.3m with funds to be received by the end of the financial year, and confident of signing other agreements in the near term

· Net bank debt at 30 November 2023 of c. £94.0m (not including the c. £8.8m outstanding proceeds from recent land sales) and on track to meet target of reducing net bank debt to c. £55.0m by 31 May 2024 (31 May 2023: £61.8m)

· Build cost inflation continues to reduce - expected to be c. 4% for H1 2024 - and there is greater availability of materials and labour

[value hound] 04/12/2023 09:16

Whatever the opposite of death by a thousand cuts is...

[marcus2418] 16/11/2023 21:22

I agree with you Cjohn. It's worth taking a smallish position as the upside could be quite interesting. The scottish supply/demand equation could look pretty good in 2/3 years but the company needs to rebalance their books first

[swiss paul] 06/11/2023 13:02

£24 million build - so what would be the profit on that ?

[makinbuks] 06/11/2023 12:14

£24m since may certainly helps and is not so little. This may be the way through this trough in the cycle. Certainly government initiatives appear likely to be focused in this area in the foreseeable future rather than the various Tory FTB schemes of the last decade. Something to watch

[value hound] 06/11/2023 08:45

What's Tesco's motto again? :-)

Seriously, though, it does help to 'pivot' things. Any news re the ongoing "discussions with other housebuilders and affordable housing providers about a number of our sites, which we hope to complete in the near term" will seriously help with share price recovery IMO - but it can't be easy in the current climate - particularly from a position of relative weakness.

[swiss paul] 02/11/2023 16:59

Skill your right in this. Am beginning to think oh no not another lifestyles co.

And they wonder why investors are leaving the UK market. Its not about risk to business its about Execs overpaying themselves

[wskill] 01/11/2023 10:55

Good to see directors are still awarding themselves shares not too sure why maybe the top of market purchase of building companies well done chaps on that or even, the need to stop paying dividends another pat on the back there then there is the selling off building plots at any price they can get ,

Surely gentlemen this is unwarranted your salaries are not small and are more than enough for your very poor efforts in management of this company .

[gn100] 27/10/2023 08:25

Hi CJohn - What I said above is pretty well the summary of the IC article. From my position I am a holder of several UK HBs and SPR. Like any other long-term holder I am underwater on all of them but I will not be selling as I fully understand the cyclic nature of these Cos but SPR is definitely the weakest because of it's balance sheet. However they are taking the right steps to rectify this among them the non-payment of a divi which demonstrates their resolve in this matter.

Regarding the timing of their land purchases - hindsight is a wonderful thing, as I often find out with my share purchases. I will not be selling (unless the story seriously changes). One can always take a little comfort with the knowledge that the UK is a small landmass with a green belt policy and an increasing population. In the long term they have to be housed somewhere, plus the already mentioned need of politicians to buy votes.

[cjohn] 27/10/2023 07:51

Hi GN100, have a look at the Going Concern section of the latest report.

They go into some detail about downside scenarios. And have taken the precaution of increasing the available headroom.

My feeling is that they have a viable plan to reduce gearing this coming year by a realistic amount, in what will be very trying circumstances.

There is a very fair criticism further up the thread about the timing of their acquisitions: they could maybe have paid less, if they'd waited.


BTW was unable to read anymore than the first few lines of the IC article.

Would you be prepared to provide a summary? Thanks.

[gn100] 26/10/2023 13:21

An article in yesterday's IC. For those who can't access it, the summary is that the large ones will recover in time but there is worse to come. They place great store on most of the large UK HBs as having plenty of cash and strong balance sheets which will protect them from disaster but yields may well get cut. SPR balance sheet, as they have fully admitted, is over-indebted although I take the point that they are looking to reduce.
Another unknown is what house purchase incentives Govs may use pre election to try to buy votes.



GN

[cjohn] 26/10/2023 12:16

I bought my first tranche of shares on 5th October, and another recently.

My opinion hasn't changed. Debt is too high as the Company itself accepts. And is taking steps to reduce it.

There is more risk involved with this Company than with some other housebuilders.

I also hold another couple of housebuilders one in UK, one in Spain. I have larger holdings in those companies as risk is less.

But I regard SPR as having an attractive risk/reward ratio.

[makinbuks] 19/10/2023 12:49

You seem to have changed your position from P280 on 5th Oct. Whilst I would like to buy back in I feel your purchases are a little too soon. I think 2024 calendar year is set to be pretty grim for house builders. They might need to make almost 20 such sales to clear their debt

[cjohn] 18/10/2023 17:25

Since the RNS of the land sale, I've been buying more of these. The suggestion that other land sales are to come will mean they're likely to hit their debt reduction targets.

[edmonda] 16/10/2023 12:01

"Land sale – delivering on cash generation strategy"

Springfield has announced the sale of c.9.5 acres of land for £5.2m in cash (£0.5m to be received in the coming days, £4.7m on completion). This is a profitable land sale, which is in keeping with the Group’s focus on debt reduction in an uncertain housing market. This again illustrates the value within the Group’s large landbank and discussions are ongoing with other housebuilders and affordable housing providers about a number of sites.

Springfield has one of the largest landbanks in Scotland. As of 31st May, the Group had 6,712 owned plots and strategic options over a further 3,255 acres (equivalent of a further 33,000 plots). The gross development of the owned landbank is c.£1.9bn, providing firm underpinning for long term shareholder value. We recently initiated coverage - see link here: - and continue to see scope for a material re-rating of the shares.

Our Fair Value / share is 110p, based on an undemanding rating of 0.9x Price/ Book.

Link to research report:

[value hound] 16/10/2023 08:06

Sale equivalent to 7.7% of net debt, but helps "pivot" in the right direction and "...a number of our sites, which we hope to complete in the near term" sounds pretty unequivocal?

[cjohn] 05/10/2023 14:44

aldriglikvid 6 Sep '23 - 10:38 - 266 of 279,

"Debt is optically high because it's not bank debt in that sense, but recourse to a seller over 5 years (and based on actual sold plots, and can be deterred)."




Unfortunately, this is a misunderstanding, aldrigilkvid.

The latest balance sheet has £70.6m of bank debt AND total deferred consideration of £35m.

You should take a look at the detailed information on possible downside scenarios in the Going Concern section of the annual report. They have increased their bank facilities, because in a plausible scenario, their peak debt levels would go above £100m and they'd breach their previous headroom.

This of course accounts for the stopping of the dividend and the emphasis in recent updates on getting debt down.

My feeling is that they have done one too many acquisitions. And as a result, there's undoubtedly more risk associated with this housebuilder than many others.