Trading Update



Just noticed there was a trading update TNS from GLE this morning. I was wondering why the SP had dropped, although it seems that most are on the downside. I did not think the RNS seemed too bad.
[click on blue text to access RNS]


The Group continued to generate strong cash flows and increased its cash
balances at 30 June 2018 to £41.3m (30 June 2017: £34.1m).

As a result of the strong performance in the financial year, the Board is
confident that the results for the financial year will be comfortably in line
with expectations.



Didn’t get a chance yesterday but just had a look. Great set of results. More than justifies the ‘Board’s confidence’ in that trading statement.

Only fly in the ointment I can see is that the dividend isn’t covered by current free cashflow which, while it is rising, is lagging the growth in the other numbers. Not a huge problem as there’s loads of cash sitting around. As long as the increased receivables get converted to cash as some point it will be fine.

Me, slightly surprised the market hasn’t marked it up more. Severely tempted to buy some more just the whole sector seems depressed (Brexit possibly?) so it feels a little like stepping out in front of a bus - it might stop before it hits you but there’s no guarantee.



Another trading update released today [click to view].

Not a great deal of detail, however, it does appear to show the dire state of the housing sector!

Gleeson Homes completed the sale of 691 units during the period, an increase of 16.5% on the previous first half-year’s total of 593 unit completions.

We continue to see strong demand for our low-cost homes, supporting both increased build activity on existing sites and the opening of new sites across our target geographic area. Our two pilot offices in Penrith and Ashington recently became fully-staffed area offices. Our target market remains strong and our customers have maintained their confidence. We do not see any signs of customer caution.

It is obvious that the markets are seeing though this apparent misguided optimism, since GLE is showing a change in the sp of ~9% (according to IG). Oh, just a minute that is a gain of 9%, so maybe the market is actually seeing through the current media pessimism!!

I suppose the real test will be to see if the sp can stay above the 700 level over the coming weeks, especially in view of the impending media blitz on behalf of project fear (which of course will have next to nothing to do with reality, but will, I suspect, influence some).



Rumours of the demise of the housing sector would appear to have been premature! Cracking set of numbers, pretty much in line with their forecasts (which many had doubted). I particularly like it because it’s at the other end of the scale from my other position in Persimmon. With Gleeson I get the feeling there’s plenty more to come as the demand at the lower end for ‘affordable’ housing seems insatiable yet none of the other builders seem interested.