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lse:crst

#1

to the sp today, mostly a kick up from the as-expected good results from those bad boys PSN. I am not a chartist but it also felt this morning like there was a breakthrough in the CRST share price, something had been holding it back even though we are approaching a splendid dividend.

I am with Woodford (even he must get one right eventually) on CRST and have high hopes that this will recover its sp, while paying out a top drawer dividend in the meantime. For some reason a builder only delivering 18% margin in a quiet market has been marked down … ok, so CRST looked ordinary compared to those companies fleecing HTB and those who gorged on overseas cashbuyers in London, but if it is a sustainable business then a p/e of 6 is ridiculous.

So, could it be sustainable, building volumes are holding up despite all the gloom? The question then is whether this problem of cost control at CRST has been over-stated and whether new management is producing better fundamentals.

Actually if fundamentals do get turned around then this is a 500p share, but there are as many against as for.


#2

Cursed CRST. A very quiet trading announcement this morning completely ignored by the market after an early fibrillation. Anyone looking to add?

Solid 4.2% increase in H1 revenues to £792M. Strong improvement in debt / creditor position about a £41M swing to the good. Resilient forward sales 11% up, albeit retail sales 4% lower than a year ago. Build cost inflation still a negative pressure at 3-4%.

Market statement that CRST has made good progress implementing its turnaround strategy eg pausing growth to control costs, unlock land value, increase cash flow in order to improve dividends. Full year outlook unchanged due to ongoing uncertainties, but that smacks of understatement, surely the dividend has to rise or maybe a special/buyback if the strategy is succeeding.

So we remain at a sp of about 370p so a p/e < 6 and a yield covered twice over at 9% and I am sure this is set to rise.

We are in a perfect storm for housing, the government boosting new build sales via HTB, calm market prices, generationally low mortgage interest rates, record high employment rates, real wage growth … what more is it going to take the return of MIRAS?


#3

Yes a v sharp headline turnaround taking place. T/o clearly set to rise strongly. But only the formal h yr a/c will show what is happening on margin - a t/o increase driven by prs will dilute op%. Also the cash generation has come I suspect largely from jobbing off land - but with a v v long l/b CRN could keep this going quite a while. The UK housing supply-demand imbalance is massive & set to acceleratingly worsen. CRN sp says little about the company but everything about brexit & the general panty wetting in the market etc. As ever the bargains are there to be had when there’s blood in the streets. This is one.


#4

Agreed, all the downside and more priced in and none of the upside despite conservative progress, financial resilience blah blah

I am already overweight here but will be looking to add again this Summer, this is dirt cheap high yield and with prospects over other cheap high yielders in my portfolio facing more certain decline


#5

In the broader housing market hpi is already in sharp turnaround. I believe this will be showing +10% yoy at least by end 2019. This will flatfoot many, both in the housing & share markets. So I see this as a minimum. The turnaround will as ever be sharpest in London/se/s (where undersupply is greatest). This will be grist to CRN’s mill.