UK housing crisis jars with builders’ fat returns

August 24, 2016

In a normal market, Persimmon’s 36 pct return on capital would get competed away. Instead, sclerotic planning and smaller rivals’ limited access to finance act as barriers to entry. Builders’ fat returns could be vulnerable if the new UK government decides to take bold action.

London’s bankers should retrain as builders

December 28, 2015

The City’s banks are sacking thousands of staff. Meanwhile, the construction sector needs 120,000 new pairs of hands to boost UK housing supply to a level that eases house-price inflation. For bankers smarting from accusations of social uselessness, it might make a decent change.

How to beat the FTSE 18-fold: keep spending

December 9, 2015

Shares of UK construction-hire group Ashtead have outpaced the FTSE average at an extraordinary rate. It has won admiration because it spends every penny it has on new kit. Negative cashflow results, but earnings grow. Ashtead’s task is to know when to stop investing.

Holcim can push for more in Lafarge tie-up

March 13, 2015

The Swiss cement group is outperforming its French rival, creating cracks in their $44 bln union. A special dividend or higher exchange ratio could fix matters. That is more likely to happen than deal failure, given that both sides would suffer if it fell apart.

CRH’s $7.4 bln buy reveals M&A tolerance

February 2, 2015

It’s a big bet. The Irish building group will increase leverage – even with a big equity issue – to buy surplus assets from Lafarge worth a third of its market cap. CRH got sucked into an auction too. Yet investors cheered. It’s how things work in a low-return, low-growth world.

Saint-Gobain’s deal cunning could backfire

December 8, 2014

The French materials group is seizing control of Swiss peer Sika by paying $2.8 bln for a minority family stake which has majority voting rights. Sika’s board is laudably indignant. And Saint-Gobain’s tactics have a hidden cost of upsetting other investors and the target’s staff.

Builder’s shaky foundations dent UAE’s credibility

June 27, 2014

Shares in Arabtec have lost more than half their value in six weeks. The abrupt resignation of its CEO, uncertainty over sovereign support and poor communication are to blame. It’s a warning to investors attracted to the country by its new emerging market status.

Blunt instrument is needed for global house bubble

June 16, 2014

The IMF is worried about the risk of a global house price bubble. Housing markets may be regional, but low supply and excess demand are common worldwide. Macroprudential tools and construction are part of the response. But anything other than an end to cheap money is tinkering.

from Changing China:

China’s pursuit of stability risks greater stress

September 20, 2011

While Western economies wither, China is in an entirely different predicament. Beset by high inflation and a frothy real estate market, Chinese policymakers have been trying to cool their economy for going on two years.

Rumble in rock garden presages more hostile M&A

December 12, 2011

That’s one way to read the unsolicited $4.6 bln offer that Martin Marietta Materials made for larger rival Vulcan. The deal won’t succeed without a sweetener. But the lesson is clear: if profits can’t be mined from the ground, they can still be found by cutting costs.