Cairn Homes

Gandalph

Has anyone looked at this since it floated last year?

They look to be taking on too much too soon despite the current need for housing in the market. Do people agree?

daheff

saw an article in the Times over the weekend on them. They do seem to be going gangbusters on it. I reckon a short term (small) investment looks like it might pay off a reasonable return.

Grecco

Got in today at a tad under 95. All ftse builders were down this morning account of brexit. I didn't think I would get in for under the Euro as the assets they now own far exceed the Market cap.
This is a great play for anyone wishing to get a piece of the construction recovery. Cairn have gathered some really valuable development lands at knock down prices from the banks.

Cairn homes
Irish times

philippoc93

I did the same Greco, in for a cost basis of €1.07 overall. I recently did an analysis of the company which I'll post up here once it gets cleared by Editors at Seeking Alpha.

In short, I think it's currently worth about  €1.15-€1.20 per share and has got ahead of itself in the last month. Major head funds like Landsdowne Partners in the U.K. have been gobbling up shares. 

Phil

philippoc93

http://seekingalpha.com/article/4029120-cairn-homes-capitalize-growing-irish-housing-industry

Grecco

Watch those rose glasses Philip they can be expensive

philippoc93

Grecco,

Always eager for some feedback. Can you elaborate a little? 

Philip

Grecco

Well for me I`m up 35% within weeks so at that stage I have to start to question the company much more. So I throw off the rose tinted glasses and ask myself would I buy at todays price?, what negatives do I see etc basically I need to convince myself to hold.
So to list a few negatives, here goes

• Very short track record
• They could go back to the market for more money
• The building industry isn't as lucrative as it was during the tiger years
• Cost of construction of new types homes/apartments will eat into profits
• Do I believe the media hype of a housing crises? Every city in the world has one. but Ireland's is really bad according to those pundits at RTE
• Bank cap on lending
• Can potentially build 11500 units! Really, I doubt that, unless they build them well out from Dublin. Maybe Cavan and Longford? or Leitrim maybe, ah yes that's it

philippoc93

Hi Grecco,

Thanks for the reply. I always like engaging with other people to learn and gain different perspectives. That said, I don't think I have rose tinted glasses on. I did say above that I wouldn't buy at today's prices as I believe the stock has run ahead of itself. You do raise some good points and I'll talk around those:

1) Agree, although they have good individual records

2) Potentially, although I don't think they will. Their capital base will be too big for Ireland, preventing them from turning in an acceptable ROIC, which will deter investors 

3) This is true because of the new building regs, but the government is incentivising homebuilding in other ways, reduced development levies, funds towards strategic developments (Adamstown), reduced social housing requirements etc
 
4) I'll just refer to the macro outlook on the Dublin market in the article. If you only saw the snapshot of the media headlines, that's only a small part my argument. We have one of the fastest (if not the fastest according to the Economist) growing population in Western Europe and have done for a while now and all those people need homes. There has been barely any built in the last 8 years. I checked the figures on the Departments website http://www.housing.gov.ie/housing/statistics/house-building-and-private-rented/construction-activity-completions
5) Central Bank Regulations have been revised. In the article and was only updated at the end of November

6) Yes, I think it's achievable over the next 10 years. 

Regarding your 35% increase, it might be worth trimming some, depending on your tax structure. 

Phil

Grecco

philippoc93 wrote: »

Regarding your 35% increase, it might be worth trimming some, depending on your tax structure.

Phil

I best delete that comment now that you've read it.
:P

philippoc93

Under what scenario do you see it being worth €2? :D