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Taylor Wimpey Fundamentals (TW.)

Taylor Wimpey confirms strong H2 trading

StockMarketWire.com

Taylor Wimpey said H2 trading into the autumn selling season has been strong, with good levels of customer confidence and demand underpinned by a wide range of mortgage products.

"While there remains some uncertainty following the UK's vote to leave the European Union, we are encouraged to see that the housing market has remained robust and trading has remained resilient," said CEO Pete Redfern.

"We have a strong order book position for 2016 and going into 2017, and we will maintain our focus on delivering our medium term targets.

"Looking ahead, we continue to implement our disciplined strategy which ensures that we are well placed to perform well through all market conditions and deliver enhanced value through the cycle."

OUTLOOK

Whilst the implications following the EU Referendum are still unclear, the UK housing market has remained resilient, with long term fundamentals underpinned by strong demand, the company said.

"Looking ahead, we remain confident that our business model and strategy focused on managing the business through the cycle positions us to perform well through all market conditions.

"We continue to focus on delivering our enhanced medium term financial and quality objectives, embedding our customer service processes and driving improvement in operational discipline.

"We expect to deliver an improvement in operating profit margin in 2016 (FY 2015: 20.3%), as previously guided, and a return on net operating assets** of around 30%. We remain committed to the announced £450 million total dividend payment to shareholders in 2017."

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Hopefully broken that downtrend

14 Nov Peel Hunt Hold 151.60 215.00 215.00 Reiterates

UK housebuilders find lenders more cautious after Brexit vote - survey - By Esha Vaish

Nov 18 (Reuters) - UK housebuilders, particularly those operating in central London, are finding lenders are giving out less finance for new projects since Britain's vote to leave the European Union, according to a report by property consultant Knight Frank.

Heightened caution among lenders is causing many to scrutinise deals for longer and reduce the amount of their lending by 5-10 percent of the project cost, Peter Macallan, head of structured development finance at property consultant Knight Frank told Reuters.

"So what that means is that effectively developers are having to put more cash equity into the deals upfront, giving lenders a bit more comfort in an uncertain market with Brexit, the U.S. election and what demand for UK housing stock is going to look like in 3-5 years," Macallan said.

The Residential Development Finance Report 2016/17 by Knight Frank, which surveyed the industry's 50 major operators, said over a quarter of respondents expected the loan-to-value on development projects to fall.

The result could be that builders offer bigger discounts to cash buyers to lure landlords and overseas buyers that might have limited purchases due to Brexit uncertainty and an increase in tax on buy-to-let and second homes.

UK property was the hardest hit sector immediately after the Brexit vote, but new homes demand in most of Britain, including outer London, has returned after an initial dip, according to builders and surveys.

Central London though remains a weak spot, with property prices forecast to fall and housebuilder Barratt having cut prices of some of its expensive homes. The pace of building in this region has already slowed.

"There are a number of developers that have recognised the (change in sentiment) and are accepting a fairly large discount to the original asking prices now," said Sebastian Wallis, Knight Frank's head of residential development valuations.

The report said big names were especially shying away from central London developments, with about 60 percent of lenders now operating in the area, down from 78 percent reported in its 2015 survey.

Lenders were most keen on projects valued at 600-750 pounds per square foot, whereas demand for projects over 1,000 pounds per square foot had reduced, Wallis said.

Macallan said lenders were more interested in outer London boroughs where demand from first-time buyers remained strong.

somewhat dependent on what the autumn statement comes up with, TW. could be serious beneficiary

i also like TEF and BVS ..... and definitely RMV should not be forgotten

Question ?
What would be the effect of interest rate rises on the s p of house builders. I guess that house prices would fall, but become more affordable to others.

but what chance of a rise in interest rates even within next 12 months?

An article in the Telegraph a day or two back suggested that a rise in rates in the U. S. is on the cards could start the ball rolling over here.

personally, i don't think the one has anything to do with the other, though i agree that in normal circumstances it would

Interest rates for savers are still dropping, which presumably implies the banks are not expecting a BoE rate hike any time soon? I have just been notified that Jan 2017 interest rates on my savings accounts will drop by approx a quarter of 1%. Good for borrowers, not for savers!

Down in the low 140's i'll have another go .

Liberum downgrades Barratt to 'sell' as it looks at UK housebuilders

(ShareCast News) - Liberum downgraded Barratt Developments to 'sell' as it took a look at the UK housebuilding sector.

The brokerage said it sees long-term value in some housebuilders as the valuation looks appealing and long-term fundamentals remain favourable.

It noted government support for the sector in the form of a more helpful planning system and the help to buy scheme.

In addition, it said the land market is very benign, and housebuilders are much more disciplined since the 2008 crisis, running more prudent balance sheets.

However, it noted near-term risks to share price performance such as slowing growth impacting house prices, which could put pressure on estimates and the threat of reflation without wage growth.

Liberum cut Barratt Developments to 'sell' from 'hold' as it sees relatively higher risks in its lower margins compared to peers, as well as it shorter landbank which could limit the sustainability of dividend payouts.

The brokerage's preferred stocks are buy-rated Bellway, Berkeley, Gleeson and Persimmon.

It highlighted Bellway's compelling valuation and said volume growth should be sustained, protecting profits if prices do fall a little as expected.

Liberum maintained its 'buy' on Berkeley in spite of the general caution around London, as the company has secured significant forward sales to protect prices and volumes and has successfully added value to sites.

As far as Gleeson is concerned, it said the unique business model gives it industry leading margins and excellent growth prospects with limited competition.

Liberum said it likes Persimmon for its high dividend at low risk. In addition, it expressed confidence that the company will achieve the payments pledged because of management's incentive scheme.

The brokerage kept Bovis, Redrow and Taylor Wimpey at 'hold'.

While Bovis looks cheap, Liberum has resisted the temptation to turn more bullish on the shares as its margin profile makes earnings most geared to downside risk.

As far Redrow is concerned, it said "risk aversion among investors may now limit appetite for investing in a housebuilder with a degree (even though comfortable) of debt".

Liberum said it may be exercising too much caution leaving Taylor Wimpey at hold, especially given the high level of dividend expected.

Canaccord Genuity Buy 151.80 167.00 180.00 Retains

Sector still unloved despite today's rising house price news. I will be looking for a dip to collect some more

Chris you should have no trouble finding a dip. lol
2517

CC is Phil, not me dc, but thanks for asking :0)

Rising H-price isn't good for business, IMHO. It means fewer sales.
The major HB's are tied up with Regulation + Planning - and "traditional" methods of construction . . . We in UK don't appear to be interested in new ideas - this may be "Safe as houses" attitude; which is good for individuals, but tends to make whole streets look-alikes.
Swathes of demolition by Prescot/Labour was flawed because they didn't start rebuilding. Many Northern Cities suffered this.... where did these folks go, I wonder?
That TW. is doing OK is about all we can expect in today's share market. I hold a few from earlier, so only a major dip would be worrying.

JP Morgan's 23 UK share tips for 2017 - By Lee Wild | Thu, 22nd December 2016 - 11:10

There's lots to worry about in 2017, not least new US president Donald Trump and potential problems for established politicians in elections across Europe. However, analysts at JP Morgan remain optimistic, and have named their favourite UK equities for 2017.

"We think that equities have a window of opportunity to perform over the next quarters, as the initial benefits of reflation are priced in," says JPM. "We advise a constructive stance on stocks for 2017."

Three key drivers of the business cycle are "looking better", it says. All three were bearish a year ago, but the yield curve is steepening again, credit conditions are improving and corporate tax cuts and repatriation of international cash should, at least, provide an earnings boost to US companies.

Inflows of cash could also return to equities, thinks JPM.

"Equities are a real asset class, which typically benefits from inflation picking up, given better corporate pricing power and higher revenues," the broker explains. Equities typically post their best returns in the low positive inflation backdrop.

"We see this period as having similarities to 1988, or 1999, the past episodes which followed big mid-cycle selloffs in oil price. The key risks to our constructive equity call are the prospect of more aggressive bond repricing if the Fed falls behind the curve, Euro politics, liquidity squeeze in emerging markets given stronger US dollar, and of eventual recessionary profit rollover, given that US is still in what is a late cycle."

For the UK specifically, JPM recently downgraded its view in the fourth quarter from 'overweight' to 'neutral'. It's now moved to 'underweight' as it believes benefits from the weak pound are largely priced in. Domestic activity is also expected to slow materially next year due to Brexit uncertainty.

What's more, UK shares have already seen significant earnings upgrades, and profits are now expected to grow by 19% in 2017.

"Most of this is due to commodities, but no sector, including domestic ones, is projected to have down earnings," explains JPM. "This might prove to be too optimistic if the economy weakens and the uncertainty over Brexit negotiations increases."

JPM worries about a squeeze on consumer purchasing power in 2017 and that the real fallout from Brexit is yet to come. It also points out that the UK is packed with high-yielding defensives, and it may underperform against a backdrop of rising yields.

However, the broker still has 23 companies it thinks are worth buying for 2017. It's also revealed its 16 least preferred stocks.

Always Good to read experts . . . but where were they BEFORE the 2007-8 crash occurred?
I posted this on Michelmesh, but it may apply here too
....any thoughts?
FWIW I bt when sp was abt. 40p -so my Yield's good ( well NOT that good! )...

...here it is....
. . . . . . the UK-Gov is to build (2017 with Chinese help!) five factories to make "Kit-homes" - I'm guessing the finish won't be real-bricks, rather a sand-plastered, or grit exterior, with weatherboarding to break large swathes of flat areas.
=So-called Garden Villages.
Unless TW. is involved, I can see the profits hit as conventional houses remain unsold, while Buyers look at their Options . . . waiting 6-months might mean joining a New Village-community and having enough dosh for that new car.
Time will tell if such houses withstand the British Weather ( a good reason for Traditional )- but kit-build should improve quality and cut-costs . . . as well as Building-time ( which is money!).
Anyone see any of these 2017 kit-houses?