Is This A Buy Yet??????????? @115p

250ish very long term resistance area.

PAG PARAGON

J P Morgan

Europe Equity Research
20 November 2012

Paragon Group Overweight
PARA.L, PAG LN

Full year profits modestly ahead of estimate, and a
substantially better dividend ▲
Price: 250p
Price Target: 290p
Previous: 225p
General Financials

Adj. EPS FY (p) 19.6 23.4 23.7 24.4 26.1
Bloomberg EPS FY (p) 19.30 23.00 - 24.70 26.10
DPS (Net) FY (p) 4.0 6.0 5.0 7.0 8.0
NAV/Sh FY (p) 247.6 266.6 284.4 284.6 303.2
Revenue FY (£ mn) 151 170 173 186 195
Pretax Profit Adjusted FY
(£ mn)
81 94 96 99 106
Adj P/E FY 12.7 10.7 10.5 10.2 9.6
Net Yield FY 1.6% 2.4% 2.0% 2.8% 3.2%
Source: Bloomberg, J.P. Morgan Cazenove estimates.

Company Data
Price (p) 250
Date Of Price 19 Nov 12
Price Target (p) 290
Price Target End Date 31 Dec 13
52-week Range (p) 257 - 151
Mkt Cap (£ bn) 0.7
Shares O/S (mn) 299
140
160
180
200
220
240
260
p
Nov-11 Feb-12 May-12 Aug-12 Nov-12

Price Performance

Paragon Group (“Paragon”) has this morning released its full year results
for the year to September 2012. The company has reported profits a touch
ahead of our estimate at £94.2m (our estimate £92.8m) and 16% higher
than a year ago. It has also announced a material change to its dividend
policy with the intention of targeting 3.0-3.5x cover over the medium
term. The immediate impact of this is a final dividend of 4.5p taking the
total dividend for this year to 6.0p, compared with our estimate of 4.4p. In
our view, the combination of having secured new funding this year and the
new dividend policy are confirmation of Paragon's recovery from the
travails of the credit crunch, and are likely to be well received by
shareholders. We have both rolled our price target forward to December
2013 and increased it to 290p reflecting the company’s return to lending.
We retain our Overweight recommendation.

 Underlying PBT £94.2m v our estimate £92.8m (2011 £81.1m). Q4
profit was £25.3m, 14% ahead of a year ago.

 The company reports that the pipeline of business at the start of the
year is strong supported by the recent securitisation and warehouse
facility. The company reports that to date there have been no arrears on
mortgage lending advanced since October 2010.

 We are making no change to our profit estimates at this stage
although the better than expected performance in 2012 increases
confidence. A lower tax rate implies modest EPS upgrades while we
have increased materially our dividend estimates to reflect the new
dividend policy. We also introduce our FY14 estimates.

 Our price target is rolled forward to December 2013 and increased
to 290p. In our view book value is a reasonable next base for the share
price.
 Analysts meeting 9.30am. 1 Finsbury Avenue, EC2M 2PP.

Closed today just off the Money for my Future position, fingers crossed for next week.

Im £1.90 pence up..he he. March contract.

Think its looking strong though shortie.

March contract also GF

27 Nov Paragon Group of... PAG Espirito Santo Execution Noble Buy 241.00 245.50 259.00 338.00 Retains

SP target 338p

Response to press speculation

The Paragon Group of Companies PLC ("Paragon") notes the recent press speculation and confirms that it is in the early stages of considering the acquisition of Hampshire Trust Plc, a wholly owned subsidiary of National Counties Building Society.
There is no certainty that a transaction will be concluded. Paragon will update the market when it is appropriate to do so.

Interesting. Bet they buy.

Small bank could be big deal for buy-to-let lender Paragon

Paragon Group, the buy-to-let lender cashing in on the decline in house ownership, is in talks to buy Hampshire Trust.

11:26
by Gavin Lumsden on Dec 03, 2012 at 10:32



Paragon Group (PARA.L), the buy-to-let lender cashing in on the decline in house ownership, is poised to become Britain's newest bank.

Responding to a story in the Sunday Times the company today confirmed it was considering buying Hampshire Trust, a small private bank owned by National Counties building society.

The acquisition would give Paragon a banking licence which it could use to offer savings accounts to its customers. As well as broadening its product range it would also give Paragon another source of funding for its mortgages.

Paragon mostly relies on wholesale markets for its mortgage funding. It was hit hard in the financial crisis but survived the credit crunch after raising money from shareholders in an emergency rights issue four years ago.

The news lifted Paragon shares nearly 2p to just over 242p. The shares have jumped 33% this year but are still well below their peak six years ago.

The shares are held by Jamie Hooper, manager of the AXA Framlington UK Growth fund, who recently told us he thought Paragon was riding a 'fantastic trend' in buy to let as people had to rent for longer before buying their own homes.

Last month Paragon reported full-year pre-tax profits had jumped 16% to £94.2 million. Chief executive Nigel Terrington said it had been able to grow through buying blocks of mortgages from the big banks that needed to scale down their borrowings


http://www.citywire.co.uk/money/small-bank-could-be-big-deal-for-buy-to-let-lender-paragon/a639334?ref=citywire-money-latest-news-list

Paragon: Acquisition of Hampshire Trust
Buy-to-let mortgage specialist Paragon Group [LON:PAG] has confirmed that it is in the early stages of considering the acquisition of Hampshire Trust Plc., a subsidiary of National Counties Building Society.

The announcement comes after reports in the weekend press.

Analyst Peter Lenardos at RBC Capital commented: “We believe this would diversify Paragon's sources of funding and make it less reliant on the wholesale funding markets.

“However, we note that there would be a duration mismatch as short-term deposits are used to fund longer-term mortgages.

“Until Paragon provides further details on the proposed transaction, there is no impact to our forecasts or price target.”

RBC Capital currently have a ‘sector perform’ rating on the stock and a price target of 260 pence.

Broker Forecasts three month consensus data highlights that 82 per cent of brokers have a buy recommendation on the stock, 9 per cent are recommending selling shares in Paragon with the remainder of brokers maintaining a neutral rating on the shares.

At 2:44pm: Paragon Group of Companies share price was +2.65 pence at 242.85 pence.

Looking good for another attempt at resistance, I've edged into profit today..!

Heading higher was Paragon, the buy-to-let lender. It added 1.8p to 242p after it confirmed reports it was seeking a banking licence with the possible purchase of Hampshire Trust, a private bank which offers loans and development finance. Espirito Santo said:


For Paragon the attraction is that the banking licence offers deposit accounts and savings bonds which Paragon could use as a source of retail funding. This would diversify Paragon's sources of funding and enable it to meet the demand it is experiencing from retail borrowers it has acquired through its recent portfolio acquisitions once they have repaid their loans – an opportunity management said they are currently having to turn down. Although this is still early stages, it does highlight managements proactive approach to increasing return on equity within the business and adds to our belief that there is significant value within the group.

PAG PARAGON

Breakout confirmed on the 48 hour
TA rule on this one. Excelent new 52
week
high...

Sold out and taken profit GF..

PAG PARAGON

This from Broker Berenberg this morning...

Paragon:
According to research by specialist mortgage broker Mortgages for Business, more
than 55% of landlords are looking to increase their property portfolios and over 40% plan to
remortgage over the next six months. The buy-to-let sector continues to see a modest recovery
stemming from attractive yields (6-7%) available on residential property investments as tenant
demand surges due to continued limited access to credit for first-time buyers. This will benefit
Paragon, which is looking to take advantage of this trend by more than doubling new lending to
c.£400m in 2013. The stock has re-rated sharply in last six months (up c.60%) and now trades on
a 2013 P/TBV of 0.9x for an RoTE of 9%.

PAG breakout..........

Broker note out late yesterday afternoon...

23 Jan Paragon Group of... PAG Canaccord Genuity Buy 273.05 270.30 313.00 313.00 Retains

313p SP TARGET.

Going very well now. think their is a trading statement tomorrow or early next week.

Interim Management Statement

The financial performance of the Group remained strong during the period to 31 December 2012, in line with management's expectations, generating operating profits (before fair value items) of £23.7 million, compared with £20.3 million for the corresponding period in the previous year, a 16.7% increase. Pre-tax profits, after a charge of £0.2 million for fair value hedging items, were £23.5 million for the period.


Trading

Redemptions across the loan books remain low and performance continues to be strong. At 31 December 2012 arrears over three months on the buy-to-let portfolio, including acquired loans and receivership cases, were 44bp, comparing favourably with 64bp of arrears at 31 December 2011 and with the 48bp of arrears at 30 September 2012. The credit performance of the consumer loan portfolios, including acquired portfolios, has been in line with management's expectations during the period.

During the quarter, £45.6 million of new buy-to-let loans and £0.5 million of further advances were made. At 31 December 2012 the pipeline of new business amounted to £102.7 million. The credit quality of the new lending business written in the period has remained excellent. Following the increase in funding capacity the Group has enlarged and extended its lending activities and we anticipate increased business volumes during the second quarter.

The loan portfolios acquired by the Group's investment division, Idem Capital since 2009 have continued to perform well. Since 1 October 2012, a further £36.7 million has been invested in portfolios of unsecured consumer loans. A number of opportunities for further investment are being considered, ranging from early stage portfolio analysis to cases where purchase negotiations are well advanced.

Cash generation from the Group's SPVs and from the acquired portfolios remained strong over the period. Free cash balances stood at £154.4 million at 31 December 2012, compared with £127.7 million at 30 September 2012.

Glad I sold out last week. Dont like late announcements, gives me the willys. More often than not something IS UP. This time looks like the bank takeover which has collapsed was the cause.

Trading looks solid mind.