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Countrywide’s share price plunges 91 per cent in a year

Countrywide’s share price has suffered further falls over the past week, taking the total decline to 91 per cent year-on-year.

The property giant has seen shares plunge from 158.50 a year ago to just 14.26p today.

In the last three months alone the group has seen around £200 million wiped off its stock market value, according to Bloomberg.

It has issued four profit warnings over the past eight months and last week sought to raise £140m in a massively discounted share issue.

Credit Suisse this week upgraded Countrywide’s rating from “underperform” to “neutral”, but cut its target price and earnings estimates.

The company made a pre-tax loss of £206m in the first six months of the year, compared to a profit of £500,000 last year.

Countrywide is dominant in many sub-sectors of the housing and mortgage market, describing itself as the UK’s largest property services group with 850 branches across the country.

It also claims to be the largest single mortgage brokerage and also owns the network Mortgage Intelligence.

Its valuations arm, Countrywide Surveying Services, says it manages panels for the majority of UK mortgage lenders.

Meanwhile Countrywide Conveyancing Services claims to be the UK’s largest conveyancer by transaction numbers.

The property group also offers property portfolio management and other related services.

AJ Bell investment director Russ Mould says: “Countrywide’s shares have continued to slide as investors have struggled to digest last week’s emergency fund raising and supply of new shares.

“Mixed macroeconomic news, in the form of an eighth straight year-on-year declines in mortgage applications, is not helping sentiment either, while a second interest rate hike in a decade and uncertainty over Brexit are additional complications for the company, where weak trading and a plunge in profits have had a magnified effect owing to its debts.”

Hargreaves Lansdown senior analyst Laith Khalaf adds: “Financial metrics are moving in the wrong direction at Countrywide with sales falling and debt rising.

“Raising £140 million of fresh equity will help reduce borrowing, but has shifted the pain directly onto the share price.

“The estate agent has been damaged by its attempt to bring the sales and lettings businesses together under one roof, and by its centralisation programme which took decisions out of the hands of local managers.

“Meanwhile the entire sector has been going through an existential crisis thanks to digital disruption.

“On top of that Brexit and changes to stamp duty prompted a 22 per cent fall in London property transactions last year, ensuring Countrywide didn’t get away with its wayward strategy.

Property Financial Management director Chris Dixon an independent mortgage broker and a shareholder in Countrywide says he still has faith in the underlying strength of the businesses within the group.

He says: “I believe Countrywide plc in an established business which represents a good diversified section of the property market.

“As a mortgage broker I believe in the property market and as a shareholder, who has personally invested thousands in Countrywide shares, I am obviously sad to see the value of my investment destroyed.

“I still believe in the businesses that make up Countrywide and it is painful to watch senior management steer the ship. I have opted not to take part in the open offer to buy more shares.”

A spokesman for Countrywide says the company does not comment on market movements.

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  • John Tidswell 9th August 2018 at 4:50 pm

    I cannot see how Countrywide can survive in its current state. There are obviously parts of the business that are doing well which are funding the parts of the business that are haemorrhaging money. The company has been carrying too much debt for far too long. It will need to restructure extremely quickly if it is too survive.