Daily Stock Market Report (Mon 23 Dec 2024) - DLG/AV, BOO/FRAS, SEE, QUIZ

23rd Dec '24 by Graham Neary

52 comments 4255 reads

Good morning! News flow remains very limited and so I will attempt to wrap up this report quickly, as I did on Friday!

Podcast: in case you missed it, our weekly podcast was published by Lawrence on Friday.

You can find Takeovers, £100m whisky, and decoding stock market jargon on:

11am: as there is no other earth-shattering news today, I'll wrap this up here. The daily report will be published tomorrow, but not by me, so let me take this opportunity to wish you all a very pleasant Christmas break. All the best!

Explanatory notes

A quick reminder that we don’t recommend any shares. We aim to review trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty. We are analysing the company fundamentals, not trying to predict market sentiment.

We stick to companies that have issued news on the day. We usually avoid the smallest, and most speculative companies, although if something is newsworthy and interesting, we'll try to comment on it. Please bear in mind the "list of companies reporting" is precisely that - it's not a to do list. We have a particular emphasis on under/over expectations updates, and we follow the "most viewed" list of readers, so if you're collectively interested in a company, we'll try to cover it. Add your own comments if you see something interesting, and feel free to discuss anything shares-related in the comments.

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yiannos1

23rd Dec '24

Have a look at the different stage loans and how these are structured and showed in their accounts.

Also explain to me why the difference for example the HSBC Holdings (NYQ:HSBC) ones?

Also explain the credit impairments in a bad economy!

I definitely do not hold and I do not short shares.

This will go down.

All the best

Yes Farage will save the planet and solve all problems!

intuitive6191

OSB could perhaps help reduce volatility with a little more information about key metrics such as the net interest margin.

In March this was 251 bps and forecast to be stable. In November, this had appeared to slip to 230/240 .

In the meantime Paragon had reported a slight increase to 316bps - quite a difference from OSB.

Also they need to define "professional" when referring to Landlords. Does this mean the Landlord is full time, or holds a certain number of properties, or something else?

Instinct tells me to be careful here - especially if the sector takes a hit.

Dont hold

Silver Moon

Been out celebrating have we?

Osb (LON:OSB)

Thanks intuitive6191 for explaining some more details.

No need to discus this further. I always try to comment after hours of research. If commentators on this thread do not want to acknowledge the fact that this is a company with a loan book of £24B showing an increase in stage3 of only £200m, that’s fine by me!

Lawrence Judd

Hi Yiannos - really good to hear you enjoyed it!

Hi Geoff - thanks for the kind words on the pod, I'm keen to make sure we're adding something of a unique perspective on the week!

ridavies

As we approach Christmas and a new year, I would just like to comment about two balancing areas; holidays and carpets. The current score in football parlance is overseas hols 30, new carpets nil. In all the comments in detail I have read on these sectors over the last many months, I have never seen that bald statement clearly made. It makes complete sense. So many family havent had a hol abroad for years, and on the other hand, you can live with the carpets you have for quite a long time, and there is very little new residential build to support that market.

Recently, the biggest carpet share, Headlam (LON:HEAD) has made a small recovery but only by selling the family silver, albeit to a profit versus balance sheet valuation. Surprise, surprise.

Where have most of the new wage increases following Labour's great victory gone? My guess is all inclusive foreign hols have been the magnet - On Beach group (LON:OTB), Jet2 (LON:JET2), Tui Ag (LON:TUID), easyJet (LON:EZJ) all reporting buoyant business- which wont do much for the UK's growth figures etc.

How many years will this pattern last? Cant see carpets recovering until well into the big Labour's building programme, and the timing for that is disappearing into the mist -'by the end of the parliament'!

As interesting is what will the holiday company's performance at this time next year, versus the 'tough competitors' that this year is building. Cockney Rebel seems to think On Beach group (LON:OTB) will double by this time next year. That's a big call. and will make the calendar 26 forecast even more interesting!

Just a few thoughts. Happy Christmas, and a very interesting new year to all. Looking forward to trawling through everyone's great tips for 25.

boringchess

Isn't HSBC a very different situation? OSB is almost entirely BTL to professional landlords with loans secured against the properties, and subsequently incredibly low default rates.

Yes it is in some ways!

But I am talking about the difference in the stages : from 2 to stage 3 loans. Osb (LON:OSB) are showing about £5B in stage 2 loans but only AT THE MOMENT a figure of £200m in stage 3.

Bonkers accounting.

G Morris

Deleted.

What are you on about?

Honestly guys!

Andy Howe

Yeah, it's that time of year.

Hold OSB at moment and just interested how stage one, two and three loans will impact them, never heard the terms before, calafornian is it?

Jon F

24th Dec '24

Democracy in Chains - Nancy MacLean. It's quite heavy going, but worth a read

timarr

It's IFRS 9.

https://www.bis.org/fsi/fsisum...

tch25wh

Stealth War - by Robert Spalding, Ray Porter, et al. Not so heavy and easily understood.

abtan

26th Dec '24

"They are boosting their earnings by registering credit impairments!"

Does this refer to the one-off £5.2m credit booked in H1?

I agree that it looks off, but in fairness they rationalise this in the H1 report:
"The impairment credit was due to updated macroeconomic scenarios, particularly house price improvement."

I think it's fair to challenge this explanation, but it could make sense as Osb (LON:OSB) booked much higher impairment charges in the prior 2 years (£30m and £50m respectively). Perhaps they were previously over-conservative and they are now simply clawing back some prior provisions?

Osb (LON:OSB) Paragon Banking (LON:PAG)

Hi intuitive6191

OSB NIM for H1 was 2.37%.
Paragon's NIM at their year end (September) on their Mortgage Loan Book only was 2.15%

For completeness Paragon's NIM at their year end (September) on their Commercial Loan Book only was 5.86% (which explains the overall 3.16% NIM that you mentioned), but I don't think it makes sense to look at this if we're comparing with OSB.

"a loan book of £24B showing an increase in stage3 of only £200m"

Stage 3 % of the loan book (3.6%) is higher relative to what I can see from previous years e.g. it was 3.1% and 2.3% in 2018 and 2019 respectively.

For context the Stage 3 Loan % for Paragon Banking (LON:PAG) (on their Mortgage Loan Book only) is currently 1.35%.

Daily Stock Market Report (Mon 23 Dec 2024) - DLG/AV, BOO/FRAS, SEE, QUIZ

Explanatory notes

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Graham Neary

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