Watkin Jones Share Discussion Threads

[farnesbarnes] 04/10/2022 16:43

Goodpick,

It doesn't matter if you are right that BTR is not student accommodation (although I didn't say it was, you should be aware of WJG group strategy - ) it doesn't matter if you are right that WJG is a developer. And it doesn't matter if you are right that others are using "a" wrong valuation model.

What does matter is that when you are wrong, you are only slightly wrong. And that doesn't seem to be the case given you feel the need to correct contrarian opinion at every given opportunity. Your posting is quite emotive.

Essential - you're welcome. Don't remember exactly what I said, but the business case for the likes of WJG and Inland is tough currently. The fact that some huge privately owned BTR developers have gone bump this year is not lost on me.

[goodpick] 04/10/2022 16:36

You dont get a falling Nav if property prices fall for WJG.

They dont own property assets -
Its all forward funded.

[value viper] 04/10/2022 16:06

Directors indeed buy

[horndean eagle] 04/10/2022 14:37

Ok. look at it this way then. REIT makes 6p in profits, nav 100 and shares at 60p. You are getting a 10% earnings yield and a 40% discount to book. Assume property prices fall 20%. REIT nav now circa 70p if you assume they have modest gearing. with a 20% fall in valuations for WJG you get losses and falling NAV. So reit is ahead both on earnings yield and nav.

[goodpick] 04/10/2022 14:27

Reits own property and they are partly a revaluation play - so not the right or fair comparison.


Wjg is a developer.

[horndean eagle] 04/10/2022 14:05

The bigger issue is yields and rising rates. Selling developments at circa 5% yields was quite profitable as asset would sell for 100. If you assume those same assets are now selling for 6% yields then it would mean WJG would be getting 83 for the same asset. They are therefore very sensitive to yields drifting out. It is still trading on a very material premium to NAV. Give the choice I would rather be in reits trading on 40% discount to nav and yielding 8%+ than in WJG.

[liam1om] 04/10/2022 13:54

Correct apart from this bit: Cost of Construction Materials soaring.

Timber prices are down 60% in the past year, container prices are down 70% or so, I havent check the rest.

[quepassa] 04/10/2022 13:25

Perfect storm:

Wrong place, wrong time.

ALL IMO. DYOR.
QP

[essentialinvestor] 04/10/2022 13:21

FanesBarnes, congrats on your caution here. I looked at this recently but your
mid September post made me think twice, much appreciated,

[value viper] 04/10/2022 12:49

Why wouldn't they ?

[bothdavis] 04/10/2022 12:42

You are assuming the directors have spare cash just lying about the place!!

[value viper] 04/10/2022 12:40

Well if they don't today or tomorrow that is a sign imv

[bothdavis] 04/10/2022 12:40

Why is it speculative building? There is a well documented shortage of student living buildings in this country.

[hybrasil] 04/10/2022 12:38

I’d say they have more sense!

[value viper] 04/10/2022 12:20

Looking for director buys to help this

[bend1pa] 04/10/2022 12:10

Just chanced my first flutter into WJG at 102p. It does seem that insider trading has been very much evident over the past few months, with a real shake-out today.

I expect the div will be cut next year, but not savagely, maybe reduced to 6 - 7p for 2023, so still a decent yield to be had at this level.

[hybrasil] 04/10/2022 11:38

All I can tell you is to be very careful.

It does not look as if this market is going to recover soon. After all what do they do-

Spec building and you can get a lot better return elsewhere

[mbdx7em21] 04/10/2022 11:35

gone long - net cash £75mn, EPS of 15.5p and divi 8p, very strong balance sheet - at £1 or so, hugely attractive

[shaker44] 04/10/2022 10:11

Looks way more upside than downside now. Topped up. Will watch then may add more. Selling looks heavily overdone to me. Interesting to see IC write up soon

[hybrasil] 04/10/2022 09:54

Thats if you can get a return on your capital!

[zxie] 04/10/2022 09:48

INSP shares jump soon

[shallwe] 04/10/2022 09:48

Took a hit of one of my other shares that tanked and topped up here. Had to be done.

[riverman77] 04/10/2022 09:46

Fall may well be overdone, but still not especially cheap versus some of the other property related names, such as VTY and MGNS, not to mention some of the REITs. As you say still expensive on a price to book basis, although in fairness WJG do have a capital light model so this metric slightly less relevant. However, just don't have a good feel about this one and suspect more downgrades to follow so will continue to avoid for now.

[goodpick] 04/10/2022 09:43

Thats now how you value businesses like this - instead its future profits.

Remember WJG has a high return on capital model which is why the NAV is so low.