Ben Bailey PLC (Housebuilder).
The Mail today said to buy Bellway as they looked very cheap. BBC is cheaper still and is constantly overlooked by analysts.
I am lucky enough to have been in this one for years, and as 2005 started, it hit 500pps. After interims that said it was affected by the slowdown in the market, and the general malaise in the housing market, it has plummeted by 30%. But is this overdone?
The basics make it look very cheap. Trading on a P/e ratio of 3.508 as compared to Bellways ratio of 6.279 it has a similar dividend yield (3.198%). Having read the investors reports it appears the market did overreact, as hidden behind the headline of being affected by the market slowdown was an increasingly large landbank and a move away from their traditional stock of 3 and 4 bed detatched homes and into semis and townhouses, to increase the margin on the land they own.
Further to this, they are specialists in brownfield development, which the government is known to favour and operate solely in the north of England, where the housing market has been less affected than elsewhere.
January sees the year end results posted, and with all the above taken into account, as well as the predicted housing crash not happening, I see a return to the higher sp levels of late 2004 / early 2005. Add into this a 15pps dividend and I see a winner, both short and long term.
Thoughts anyone?
Alan

Went well today. Anticipation of good results? Or, sector consolidation hopes?

Either way, not grumbling.

A good week in fact (so far).
I think it will trace its historically predictable path of peaking around results day and the gently heading south for the summer, but the chart (to a non chartist like me) suggests differently.
Alan

?

Strategic review = could sell itself.

Or an MBO (unlikely).
Bring it on.................

I don't see an MBO, either.

My view; very likely accept a bid.

WMPY are looking for acquisitions.

Alan - well done on this - I have watched this since you mentioned it at about 3 - and I always thought it was due a correction, too good to be true and I just knew that as soon as I invested it would go down - so I never actually took the plunge.

Well done you - u always said it had legs - and so it seems

Baza

Thanks Baza. You know the story on this. I am actually emotionally attached to this as the first stock I ever bought at the princely sum of 50p, but at the 3 stage it really was way undervalued.
alan

Current EPS are 74.5p (2005). If we assume this years results next week show similar (and why not) what kind of multiple do we think would be reasonable as a for sale figure?
Currently trading at about 9 and a half PE ratio, this still looks a tempting buy for a private equity group and the increase in land bank over the last couple of years may tempt the Wimpeys and Barrats of this world.
Anyone fancy a guess at a "for sale" figure??
alan

My guess: 800p.

Results out today are encouraging without setting the world alight.
3 days earlier than expected.
Alan

Like some of the other smaller housebuilders, BBC has been feeling somewhat greater cost pressures than those of the bigger builders.

The train is in motion. I expect we'll soon see a formal statement that BBC is open to offers.

The market for housing plots is very competitive and should secure a buyer for BBC.

Agreed. And to be fair I was told this may happen some months ago. I even posted it on here!!
The increase in land bank that they borowed to finance now makes perfect sense and looks astute. Not huge by any means, but it makes it worth more and a more attractive proposition for both existing builders and private equity.
Alan

Hint of rose tinted spectacles...opposite view could be that they are underperforming the competition and overgeared. Just needs interest rates to rise sharply, house prices to fall and if no buyer by then watch out as land values sink, at least in the short term. Your scenario more likely (and really just envious as I never did buy, but KIE have hardly been a slouch!) but don't get carried away with emotion.

KIE has been an excellent investment, and so has BBC. Commentary from the bigger players suggests that there is a steady market for new housing overall in the UK. Half a dozen UK housebuilders would want to add 3000-ish plots to their banks. Perhaps with a touch of irony, I would place KIE amongst those who might be interested. Also, Miller may take a tilt, and may use BBC to get a listing. The big listed housebuilders are also obvious candidates.

Yes, rose tinted spectacles and there's many a slip .... some caution needed but I still think BBC will put itself up for sale and will accept the best bid. I've guessed at 800 p to give a premium to shareholders and give some margin for the buyer. I've seen 850p mentioned, but who knows? Even if it's 750p plus the final dividend I won't be complaining.

I refer the right honourable gentlemen to post 93 of this thread.
Alan

hewittalan6, yes, re-read your post 93 - good one. The writing has been on the wall for while but, as ever, it becomes clearer with hindsight.

Stormy times over the last week or so (in common with everyone else), but yesterday saw huge volume and the majority of it was broker to broker trades.
Today the volume is more subdued but seems to be a fair bit of market maker trades.
Wonder if this is significant.
Alan

All the M&A activity in this sector is doing BBC no harm at all.
If you are going to put yourself up for sale, now is a damn good time to do it!!
Alan

Is something brewing at BBC?

LONDON (Thomson Financial) - Real estate company Town Centre Securities PLC said it bought 10,000 shares for 659 pence each and 100,000 shares for 655 pence apiece of UK-based real estate developer Ben Bailey PLC, raising its stake to 400,000 share or about 3.34 pct from 2.42 pct in the company.