Bottom Line: Crest has missed the boat

IT IS hard to fault Crest Nicholson's timing. Not only have its shares risen more than fourfold since September 1992, but had it joined the sector's rush to tap investors last year, it would have had to issue twice as much paper to raise the same amount of money.

Its performance in reducing debt is also admirable, even if the price has been running the housebuilding arm for cash not profit for the past three years. The withdrawal from property has been more or less orderly and the firm avoidance of a return to speculative development is encouraging.

The exemplary timing is not necessarily such good news for shareholders, however. By Crest's own admission, its construction division is on its knees. It won't bid for contracts without a decent margin, which in the current market means it can't get enough work to cover its overheads.

In housebuilding, where the funds are to be used to expand the land bank, the wisdom of running down stocks to just 18 months' building at current rates is likely to be sorely tested by the recent buoyancy of the market for housing land.

With the plots in the books at pounds 21,000, against an average selling price of pounds 75,000, the division's margins are safe enough for now. But there is no cushion should land prices remain overheated.

Kleinwort Benson, the house broker, has pencilled in profits this year of pounds 10m and pounds 14.5m next. That puts the shares, up 6p yesterday to 114p, on a prospective p/e ratio of 21, falling to 14. That is par for the sector but the boat has been missed.