Can anyone explain or help me to understand the anomalous valuations of Forterra (LON:FORT) and Ibstock (LON:IBST) versus Michelmersh Brick Holdings (LON:MBH) .
Forward PEs for Forterra (LON:FORT) and Ibstock (LON:IBST) are 18.8 and 17.7 respectively, while Michelmersh Brick Holdings (LON:MBH) languishes on a forward PE of just over 10. This assumes that broker forecasts are in the right ball park. However we know that house building remains in the doldrums and is likely to do so for another12 months, depending on where interest rates go. We also know from the recent update from Brickability (LON:BRCK) that the brick market is challenging with a significant decline in demand for imported and UK bricks.
I also accept that Michelmersh Brick Holdings (LON:MBH) is much smaller, having a market cap of around £85m versus roughly £360m Forterra (LON:FORT) and £640m Ibstock (LON:IBST). However Michelmersh Brick Holdings (LON:MBH) had net cash of £11.8m at the end of June last year and trades below NAV of around 94p. It is also forecast to meet market expectations for the full year, although this may change, given the update from Brickability (LON:BRCK). I haven't checked the company reports but according to Stockopedia Forterra (LON:FORT) has debt of around £70m and Ibstock (LON:IBST) £130m.
I would add that Frank Hanna, the well regarded joint CEO of Michelmersh Brick Holdings (LON:MBH) is leaving to become CEO of Brickability (LON:BRCK) where the founder Alan Simpson is retiring, but this in my view doesn't explain the valuation disparity
All are potential bid candidates and all will benefit from a fall in interest rates and recovering in the housing market.
I hold Brickability (LON:BRCK) and have a small holding in Michelmersh Brick Holdings (LON:MBH)
