1. Hello Guest Do you know binary.com offers exclusive $20 No Deposit Bonus for FX Binary Point visitors? Click here to sign up

Taylor Wimpey builds up record results

Discussion in 'Market News' started by Lily, Mar 1, 2016.

  1. Lily

    Lily Forum Member

    Joined:
    Aug 29, 2015
    Messages:
    7,343
    Likes Received:
    0
    Company benefits from help to buy and returns £300m to shareholders

    The UK housing market has strengthened at the beginning of 2016, with strong price growth, although the central London market has stablised with flat prices and more normal sales patterns.

    That is the view of Taylor Wimpey, which has reported a record performance for 2015 with more than 13,200 homes built across the UK and an 8% increase in average selling price.

    We are focused on creating long term value and are supportive of policy initiatives that promote sustainability and reduce volatility in the housing market.

    Like its peers before it, in line with expectations, Taylor Wimpey delivered record 2015 results today, helping around 5,200 households through Help to Buy and delivering 13,219 homes (ex-joint ventures in total). With government and the main opposition party pro-homeownership, we see few challenges to cash generation during the next 12-24 months. The shares currently offer investors a 6.1% yield and we remain comfortable recommending investors buy Taylor Wimpey shares.

    In our view, Taylor Wimpey has had a clear strategy since the credit crunch, to focus on value rather than volume and to invest in strategic land. The group is getting close to its optimal scale of 14,000 units per annum and the landbank and infrastructure to support this aspiration are in place. With almost a ‘one-one-out’ landbank strategy and close to half of land strategically sourced, margins and cash generation are high. We therefore believe that there are upside risks to the dividend and fewer operational risks than for its more growth-orientated peers.

    Full-year results were in line with expectations, with operating margins rising sharply and the balance sheet in a net cash position. The previously flagged £300m special dividend will be paid in July. Trading in 2016 has been good, with pricing and sales rates ahead of the prior year. A solid set of results but we see no near-term catalyst for outperformance. No changes to our forecasts or hold recommendation.

    The year looks to have started well, in line with the peer group, but as elsewhere Taylor Wimpey looks to be selling at a much higher rate than it is able to build. Given the limited lifespans of mortgages, this cannot go on indefinitely without a material increase in production. Planning and labour bottlenecks still make this difficult. At this stage we see no major change likely in forecasts or expected dividend distributions but we slightly raise from £690m pretax profit (slightly below of consensus) and 11.3p of total dividends to just above £700m. Our fair value, therefore, is also materially unchanged at 187p and with the shares trading at 186p we can see no reason to change from the current hold stance.

    Full year results are in line with expectations, but to reflect a slightly stronger volume, price and margin outlook we have increased 2016 estimates by 4%. The group has seen a strong start to the year and in our view there is still upside risks to both profit estimates and the size of the cash return. Accordingly, we are increasing our target price to 205p, which maintains our add recommendation and would equate to a 7% yield for 2017 on our forecasts.

    Continue reading...
     

Share This Page