MJ Gleeson (LON:GLE) released its interim results for the six months to 31 December 2010 today. I reviewed MJ Gleeson on 26 January 2011 and, whilst being underwhelmed in general with what I found, saw some potential upside on the potential appointment of a new CEO and how they were going to spend their surplus cash (dividend and/or strategic acquisition).
I am not going to dissect the interim results to the same degree, as I am more interested in annual results spanning over a decade, but will give some high level thoughts.
6 Months to December 2010
NB all comparatives are to 6 Months to December 2009 unless otherwise stated
Revenue was down 24% primarily due to there being only one land salen rather than two, although house sales did increase 73%, albeit from a very low base. A second land sale has been agreed but not completed, so that will help FY11 results. Negative comment about the lack of supply in mortgages implies that the glory days of house-builders are far over the hills. Overheads were slightly reduced, benefitting from the release of a prior provision. A huge Profit After Tax of £0.1m was recorded, but at least it was in the black. Cash generation was good, with cash balances increasing by £0.5m to £19m. Net Asset Value was £98m or 186p per share. No interim dividend was declared.
Valuation
The shares reached the dizzy heights of 140p in the last few weeks, perhaps fuelled by speculation that there might be a special dividend or some other favourable news. At the time of writing, the shares have fallen back to 126p, giving the company a market value of £73m. Assuming that the cash balances are valued at par (about 19p per share), this means that the rest of the business (strategic land and houses to be sold) are still valued at a 35% discount to book cost.
Frustrations
No update on the CEO and no update on how and when they intend to spend that cash. It is difficult to see any positive stimulus on the share price without any news. At least they are chugging away with what they've got, covering the overhead and maintaning the cash balance. GLE will remain in my portfolio for the time being, but if I see an opportunity that is more favourable, I shall not be too sentimental about removing it.
Filed Under: Value Investing,
About the Author's Blog
10 Value 10 is a blog written by a private investor, who happens to be a Chartered Accountant with experience in corporate finance, venture capital and banking, to identify and comment on market-beating investments through a value-based approach. ...read more or visit website »
Disclaimer:
IMPORTANT - this blog acts as a commentary for my own analysis of publicly available information on companies that interest me. It does not constitute any recommendation to buy or sell any shares or investments that I may or may not hold. If you want professional advice, go to a broker (who has the necessary authorisation and professional indemnity insurance!)
M J Gleeson Group PLC is a United Kingdom-based company. The Company operates in five divisions: Gleeson Regeneration & Homes, which focuses on estate regeneration and housing development on brownfield land in the North of England; Gleeson Strategic Land focuses on the purchase of options over land in the South of England; Gleeson Capital Solutions manages the Group's Private Financing Initiative investments in social housing; Gleeson Commercial Property Developments is engaged in commercial property development in the United Kingdom, and Gleeson Construction Services includes constructions services in the United Kingdom. Its subsidiaries include Gleeson Capital Solutions Limited, Gleeson Construction Services Limited, Gleeson Developments Limited, Gleeson PFI Investments Limited, Gleeson Properties Limited, Gleeson Regeneration Limited and Gleeson Strategic Land Limited. more »
