Tuesday, July 06, 2004
Will Ben Bailey bring home the bacon?
A quick look at my portfolio shows Ben Bailey as comfortably the largest holding. 'Comfortable' because though it is nearly twice the size of the Mayborn exposure, Ben Bailey still trades at a cheap rating of 5.2 times previous full year earnings and 4.1 times expected earnings. Moreover, the company's trading statement from June 28 vindicated the decision of a few days previous to increase my stake:
Market conditions remain positive, with reservations for the whole of 2004 being 18 per cent. ahead of the corresponding period of 2003, which represents 90 per cent. of the Company's expected full year volume output. Selling prices for reservations taken for the year to date show an increase of 19 per cent. per square foot over what was achieved in the whole of 2003. These factors give the Board confidence that results in 2004 will show further significant growth.
Ben Bailey has produced smaller homes recently, so this increase in price per square foot is not as indicative of profits as you might like. Still, the trading and sentiment are positive overall.
I expect interim results early August that will hopefully be met with an increase in share price closer to fair value, which, based on today's information, I feel is around 540p. However, with recent interest rate increases and the state of the UK housing market, which I believe to be grossly overheating, I'm keen to take my money off the table.
So, fingers crossed for Ben Bailey and early August. If I do manage a sale (my first since beginning the blog) I'll naturally need a new home for the cash. I hope to discuss potential targets with you soon.
The Artful Dodger
Market conditions remain positive, with reservations for the whole of 2004 being 18 per cent. ahead of the corresponding period of 2003, which represents 90 per cent. of the Company's expected full year volume output. Selling prices for reservations taken for the year to date show an increase of 19 per cent. per square foot over what was achieved in the whole of 2003. These factors give the Board confidence that results in 2004 will show further significant growth.
Ben Bailey has produced smaller homes recently, so this increase in price per square foot is not as indicative of profits as you might like. Still, the trading and sentiment are positive overall.
I expect interim results early August that will hopefully be met with an increase in share price closer to fair value, which, based on today's information, I feel is around 540p. However, with recent interest rate increases and the state of the UK housing market, which I believe to be grossly overheating, I'm keen to take my money off the table.
So, fingers crossed for Ben Bailey and early August. If I do manage a sale (my first since beginning the blog) I'll naturally need a new home for the cash. I hope to discuss potential targets with you soon.
The Artful Dodger
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