Portfolio Plus, I agree with your NTA of $2.48 after H1 results....

Portfolio Plus, I agree with your NTA of $2.48 after H1 results. Deduct off an 8c dividend and we are left with $2.40 which is $0.73 above the current share price. So if you think the current NTA represents a true valuable of current land holdings and developed properties available for sale then there is a possible uplift of 43.7%

As someone rightly said above FY'19 and FY'20 will see a strong cash flow as developed holdings are sold off with only a small land holding replenishment required.

The real question is has underlying demand for VLW product fallen away. I strongly believe the answer is no, and here are my reasons.

Population growth has not slowed down. Australia is still taking in around 300,000 people per year through a combination of permanent immigration and others on long term visas for work and/or education.
These people have to live somewhere. What has dropped off dramatically is the construction of high rise apartments across the country. Some of this is due to less overseas buyer demand and much lower demand from investors. But the new arrivals keep coming regardless.

The more stringent and delayed finance approval processes by the banks is the cause of the problems VLW is now experiencing. The delays are here to stay but will only cause a problem for a short while whilst the banks and borrowers adjust. This will cause more borrowers to use non traditional lenders and eventually the big banks will wake up and realise they have overreacted. And still the new arrivals keep coming.

During the Victorian election Premier Daniel Andrews rejected any reduction in population growth and went on to say it was great for the economy, but that it just needed to be much better managed. He received a fabulous election victory winning many new seats and almost an upper house majority. That tells me Victorians are firmly signed onto population growth.

The real question is whether VLW starts to reduce its margins to move more product?

Case against reducing margin:
All competitors are suffering the same problem
Demand from first home buyers is getting better ( a VLW target market)
Main VLW developments are located in growing Melb and SE Qld markets
Marginal builders likely ones to suffer from any slowdown, ultimately making VLW stronger
Existing strong balance sheet with a planned cash conversion program in FY'19 and FY'20
Costs for holding onto completed inventory for a few extra months is very modest
Current share buyback will be very EPS and NTA accretive

Case for reducing margin
Get ahead of competitors if you believe the market will weaken much more
Existing low end home prices crash making VLW product uncompetitive
Urgent need of cash

I believe the case for not reducing margins is much stronger than the case for reducing margins. And I believe the slow down for VLW product will be temporary.

So as funds and allocation becomes available I will continue buying.