Watkin Jones Share Discussion Threads

[manrobert] 09/1/2017 13:12

shares still no responding though?

[shaker44] 09/1/2017 12:50

Thanks from me too Rivaldo. Excellent post

[rivaldo] 09/1/2017 12:03

No probs Dibbs. Peel Hunt's upgrade is part of a big note from them today on the property sector. WJG are one of their Buy recs, and per FT Alphaville just now they say:

"Watkin Jones – The forward sale model drives strong cash generation and high visibility on profits. The shares trade on a FY17 cash adjusted PE of just 7.2x and offer a double-digit free cash flow yield and 5.3% dividend yield."

[dibbs] 09/1/2017 10:10

Thanks for posting Rivaldo. Good to see price targets being raised. Flat lining chart will hopefully break upwards soon!Dibbs

[rivaldo] 09/1/2017 08:31

Peel Hunt have today raised their target price to 155p (from 140p) and say Buy:

[paleje] 06/1/2017 15:39

Perfect example of WJG not having all their eggs in one basket so to speak, the residential accommodation sales combined with the student quarter rentals. Not new news though.

Still beats me why the share price is languishing, I added today, update soon.

[rivaldo] 06/1/2017 12:38

New article just out:



"Funding secured for £100m London Stratford tower
Aaron Morby
5 hours ago

Specialist student accommodation builder Watkin Jones is set to start work on a 33-storey scheme at Stratford in East London.

The decision to go-ahead follows operator UPP and The University of London securing a £104.7m funding deal for the project.

Its Duncan House scheme on Stratford High Street will rise to over 100m and joins a cluster of tall buildings in the area.

It will provide over 190,000sq ft of new accommodation and will involve UPP operating 511 new study bedrooms and communal space for the length of the concession.

Demolition work is already underway on the site with construction due to start in March.

The scheme designed by Hodder + Partners also includes 44 flats for sale, which will be sold by Watkin Jones.

etc"

[janekane] 06/1/2017 12:11

added 3702 today hoping for great results on 18th

[llwyd] 05/1/2017 11:09

Agree DofD

[daveofdevon] 05/1/2017 10:50

OK but at the last interims housebuilding was only 11% of the total turnover and I doubt if the market sees much similarity with the sector leaders such as Bovis Barrats etc.

[llwyd] 05/1/2017 09:36

WJ are housebuilders aside from their core business of student accommodation. Google 'Watkin Jones Homes' Very active in that area. They also build for the likes of Tesco.

[daveofdevon] 05/1/2017 08:23

Maybe thats because WJ is not a housebuilder

[spoole5] 05/1/2017 08:14

Rally in housebuilders but not WJ!

[dibbs] 05/1/2017 00:04

One of mine too davidosh! Fingers crossed.

Dibbs

[effortless cool] 04/1/2017 14:34

Well let's hope your performance last year is not a precursor!

264 carmensfella -32.67%

[davidosh] 04/1/2017 14:22

WJG is one of my five picks in the Stock Challenge for 2017 so fingers crossed

[spellbrook] 30/12/2016 21:33

Worth re reading......I like this paragraph....“The next opportunity is build to rent, it is a very similar multi-occupancy model to purpose build student accommodation and this is a natural progression for us.



The boss of one of North Wales’s biggest firms has revealed how the banks pushed the business to the brink when they demanded the immediate repayment of £160m in loans.

Mark Watkin Jones spoke to Business Post a month after he was named the Business Person of the Year at the Daily Post Business Awards following a remarkable few years which has seen the Watkin Jones Group floated on the London Stock Exchange.


But he said that the success may never have happened after the firm was put at risk during the financial crisis in 2008 and subsequent recession when Lloyds and RBS decided to call in their loans to the business.


Mark, who was appointed managing director of Watkin Jones Group in 2003, said: “Until 2008 we had been growing the business and the banks were throwing money at you, all you had to do was ask and you got.

Mark Watkin Jones, chief executive Watkin Jones Group
Mark Watkin Jones, chief executive Watkin Jones Group
“In 2008 we were quite insulated from the financial crisis but there was a change when Lloyds took over HBOS, there was a very different attitude and I feel that they were using this opportunity to go after businesses they felt could repay their debt.

“We had £160m debt at the time, £100m with Lloyds and £60m with RBS. They wanted it straight away but we negotiated the payment plan at 18 months.


“We set up a plan and within a few months we had repaid £140m of that and refinanced with another bank.


“From March 2010 to November 2011 we restructured the business to ensure debt could always be repaid if demanded.”

He said that the action by the banks had put the business at risk.

He said: “It was very aggressive and unnecessary so I don’t have a lot of allegiance to Lloyds banking group. They could have handled it better.”


He said had they not had “the drive and determination to beat them” they could have pushed the company out of business as happened with a lot of other firms.

Mark added: “They got their money and on back of that we have really grown the business.”

Focus on what was working well

He said the good thing that came from that difficult period was to understand they really had to hone in on what was working well for the business.

He said: “From that we have focused and specialised in a particular sector which is purpose built student accommodation and that has been good for us.

“We have now delivered just under 33,000 beds in the last 16 years and our pipeline is in excess of 8,000 beds.


“There is still plenty of growth in that because there is a lot of demand. The business is going well.

“Our core business is now student accommodation and when you specialise in something you become more efficient.”

Cash is king

He said making “cash king” has also been key.

He said: “We have always had a core of 20 to 30 projects on site but we were looking for more margin driven opportunities because we had to generate cash to pay the debt down.

“I have heard many times that ‘turnover is vanity and cash is king’ but until something like this happens you don’t always appreciate the value of cash and generating cash gives you the firepower to acquire new opportunities. The stronger your balance sheet is the more it allows you do other things.

Bangor University Business Person of the Year 2016, Mark Watkin Jones, receiving his award from professor John Hughes, vice chancellor of Bangor University
Bangor University Business Person of the Year 2016, Mark Watkin Jones, receiving his award from professor John Hughes, vice chancellor of Bangor University
“A lot of businesses fall into the trap of chasing turnover, growing but not really remembering the basic business model, control and making money and making profit.

“Having cash and cash flow is crucial, in fact cash flow for all businesses is the most important thing. You are only profitable if you can keep paying the bills and acquiring new opportunities.”;

Mark said he had not lost any of the appetite for the demanding role as MD. He said: “Everyday you learn something new because every day is different. That is what is exciting and gets you out of bed in the morning, looking for that next opportunity.


“The next opportunity is build to rent, it is a very similar multi-occupancy model to purpose build student accommodation and this is a natural progression for us.

“It is plug and play living, you arrive and all the services are set up for you. This is the next big opportunity although there is also still plenty of demand in the student sector as well.”

He said the float on the AIM market had given the firm greater profile and allowed them to “really grow the business”. He said: “It also gives you a sense of purpose.


North Wales's fastest growing businesses have been revealed
"If you are a successful business how do you keep driving that business forward.

"You need a new challenge and you are under more pressure because you have to deliver but I think people and businesses work better under pressure because have to keep getting better and coming up with ideas. So it has been good for the business.”

Lloyds and RBS have been asked to comment.

[jonwig] 28/12/2016 14:44

R Ball - OK, taking your points in turn:

• student market falters [sic]. Not a problem for WJG, but could be for the property owner. (If you want to discuss ground rents, I'm amenable, but take my word, they're irrelevant.) And, as I said, a bubble in the making ... maybe!

• Conversion into a flat: some have said (sorry I can't cite as my memory is poor) it's not too hard as modern young adults are more flexible in the face of hard-to-buy.

• Timeshare? A student commits to a 50-week occupancy with full rent up front in most of the situations I've encountered. (I'm an investor or watcher of DIGS, ESP, UTG.) Most buildings at present are fully let at the start of the year. That can change, of course.

• Watkins come to market? Suggest you read the prospectus! However, prominent are paying off debt, expansion of opportunities and (less obviously stated) family shares settlement and consolidation.

• As for 'steering clear', some investors have 1/2 year lock-ins, some not. For myself, any large-scale selling would be a buying opportunity (ceteris paribus). I tend to ignore that sort of thing.

[r ball] 28/12/2016 13:20

What is the resale value if student market faulters? I cannot see it be easy trying to convert a student pod into a flat or a hotel room. Is this not a form of timeshare for investors and likely to blow up? Why did Watkins come to the market. If it was an exit for investors then stay well clear for at least 2 years post admission.

[rivaldo] 28/12/2016 12:31

Really interesting interview with the MD about how the banks nearly shut WJG down in the 2008 crisis, the prioritisation of cash generation and the opportunity for build to rent:

[effortless cool] 28/12/2016 12:14

jonwig - I think the buyers tend to be pension funds and property funds, that can't go bust per se.

Th main risk, I think, is a drop in demand if student numbers fall, or an increase in supply, as other developers enter the niche.

[nurdin] 28/12/2016 12:10

They may not go bust but they could pull out if the trends in the students accommodation market takes a turn for the worse.But as shanklin says,that would be to WJAs advantage....perhaps

[jonwig] 28/12/2016 12:09

Shanklin - I'm assuming the end-buyer has gone bust and its lenders are at the front of the queue. nothing left for the builder.

EC - thanks. But 2009-10 did see bankruptcies when the LTV was high enough.

[effortless cool] 28/12/2016 11:59

Did I hear my name?

Given the forward sales are to institutional investors, I don't see that there is much chance of them going bust. Any insurance would more likely go the other way - the institution buying insurance to cover the risk that WJG does not deliver the development.

[shanklin] 28/12/2016 11:59

I guess its possible that buyers dropping out part way through a development, would be the most profitable situation for WJG, provided there are stiff penalties for the purchaser doing so. Such as full ownership of the development reverting to WJG?