Taylor Woodrow Share Discussion Threads

[judge jury] 29/5/2007 20:56

Also, I guess the recent sell off has been caused by those short term investors, who bought in the hope of a counter bid, closing their long positions now that they realise the counter bid wont materialise.

[judge jury] 29/5/2007 20:53

Not sure. All I can say is that WMPY and TWOD are now bang in line with the merger ratio. That and today's EGM approval finally confirms in my mind that the merger will proceed. I would also expect them to move or less in line with each other from now on.

[8gamsby] 29/5/2007 18:59

10% AND RISING WHEN WILL IT END.

[conan the trader] 27/5/2007 00:52

all property stocks were down i think - rising interest rates plus the continuing US property woes with the discounted sales of new homes data

[8gamsby] 26/5/2007 17:55

I wasnt expecting that.Down over 8% through the week.The valuations are now within 2%. maybe better news next week.EGM on tuesday i think.

[judge jury] 25/5/2007 09:56

Still have a 540p target by the end of the year, assuming the UK market doesnt capitulate (and no general market sell off). Could be higher if the US market shows consistent signs of coming out of the doldrums

[markpun] 25/5/2007 09:47

Anyone care to call the share price by Sept?

[spob] 25/5/2007 09:32

Which means that ex divi day was Wednesday the 23rd.

[judge jury] 25/5/2007 09:25

Extract from the merger announcement on 26 March:

"In addition, those Taylor Woodrow Shareholders who are on the register of Taylor Woodrow Shareholders as at close of business on 25 May 2007 will be entitled to receive and retain the Taylor Woodrow final dividend of 9.75 pence per Taylor Woodrow Share in respect of the year ended 31 December 2006, payable on 2 July 2007."

[spob] 25/5/2007 09:13

no - ex divi days always begin with a W

[judge jury] 25/5/2007 08:18

Think it's ex div day today for TWOD - 9.75p dropping out of the price

[yewtrees] 25/5/2007 08:14

At the moment in the South East it is a sellers market, just look at the rightmove site and the number of houses sold outway the numbers for sale. Ask any estate agent in the South East and they will tell you they are still busy. For how much longer I don't know. (Just an observation from someone who follows the property and rental markets)

[spob] 25/5/2007 07:34

Merrill Lynch - watch this space - LOL

[markpun] 25/5/2007 07:31

Fears that interest rates in the UK would hit 6% this year also had an impact on a number of sectors, including housebuilding. Persimmon was one of the top fallers on the FTSE, down 49p to £13.67. Redrow, meanwhile, fell 16.5p to 592p, and Taylor Woodrow dropped 11p to 475p.

[markpun] 25/5/2007 07:21

Spod,

PROPERTY

• Barratt Developments, Persimmon and other British homebuilders are unlikely to suffer from a US-style property slump or a slowdown similar to Spain, Merrill Lynch said.

[spob] 25/5/2007 07:13

Median price of new homes down 11.1% in just one month

"...the biggest month-to-month drop on record..."

[markpun] 25/5/2007 06:59

Spod,

I am surprised we ended down so sharply as the major home builders share price ended modestly higher.

[spob] 25/5/2007 02:17

New home prices plunge, sales soar

Sharpest decline in price of new homes since 1970 spurs stronger than expected sales in April.

By Chris Isidore, CNNMoney.com senior writer
May 24 2007: 11:57 AM EDT


NEW YORK (CNNMoney.com) -- A big drop in the price of the typical new home sold in April spurred much better-than-expected sales, according to the latest government reading on the battered real estate and home building market released Thursday.

New homes sold at an annual pace of 981,000 in April, up 16.2 percent from the revised 844,000 pace in March. Economists surveyed by Briefing.com had forecast an 860,000 rate in April.

The price of a typical new home sold in April was off more than 10 percent from a year earlier.

The gain in sales compared to March is the biggest jump in 14 years. But even with the April spike factored in, April sales came in 10.6 percent below year-earlier levels.

The median price of a new home sold in April plunged 10.9 percent from a year earlier to $229,100. The new price reading was also down 11.1 percent from the March reading.

It was the sharpest year-over-year drop in median new home prices since December 1970 and the biggest month-to-month drop on record.

Paul Kasriel, chief economist with Northern Trust in Chicago, equated the strong sales to the strategy of the Detroit automakers, who cut prices and offer other sales incentives to counteract weak demand for their cars and trucks, sometimes taking a loss on the sales.

"The builders are clearing out the merchandise," he said. "They're doing a Detroit here. When you have excess supply, the quickest way to move supply back into balance with demand is to cut the price, and finally they're doing that. I would not say this is the bottom of the housing recession."

Fastest and slowest growing home markets
Kasriel pointed out that the median number of months it takes builders to sell a completed home has risen every month for the past seven. It now stands at 6 months, the longest time it takes them to move a completed home since 1993, and it's almost double the 3.4 months it took them to sell a home as recently as September.

However, the faster sales pace in April helped take the estimated months' supply of homes on the market down to 6.5 months from 8.1 months in the March report.

The median price is the point at which half the homes sell for more, and half sell for less. The average price, which is generally higher than median prices due to the impact of high-priced homes, was also lower, although the drop was not quite as sharp. It fell 3.6 percent from year-ago levels, the biggest drop in six years.

Economist Robert Brusca of FAO Economics said the much sharper decrease in median price than average price shows that the biggest declines are taking place in the less expensive part of the market.

"That may have something to do with subprime problems," he said, referring to the problems with the mortgages written to buyers with less than top credit ratings. "Clearly, builders have been cutting prices and just as clearly, the strategy has been working."

Adding to a home's curb appeal
But unlike Kasriel, Brusca said he believes the spike in sales brought on by the price cuts is important, and it could be a sign that the battered housing sector could turn around sooner than later.

"If we look at trends in average new home prices around the time of the last recession, we see that builder capitulation on prices was the catalyst for ending the weakness in the sector," he said. "The low prices jump start demand and get some inventory off homebuilder's hands giving the market a push."

The weakness in pricing has been seen since last year. Many builders have been reporting that they were cutting prices.

The prices being quoted in the Census Bureau report may actually be underestimating that price weakness, since three out of four builders responding to their trade group's survey report offering incentives such a covering closing costs and offering extras in the homes at no charge in order to maintain sales in the weak market.

The downturn in new home sales and home building has hammered results at the nation's largest builders, which are reporting losses, lowered earnings guidance, coupled with rising cancellation rates from buyers and charges for walking away from options they have on some land.

Thursday, luxury home builder Toll Brothers (Charts, Fortune 500) became the latest to report a sharp drop in earnings. It had already warned it expected to miss its earlier guidance on 2007 earnings.

Pulte Homes (Charts, Fortune 500), the No. 4 U.S. homebuilder, posted a loss late last month. No. 2 homebuilder D.R. Horton (Charts, Fortune 500) reported a 37 percent drop in the number of new homes sold in the latest quarter, citing weakness in prices and saying the typical start to the spring home buying season hasn't begun.

No. 3 Centex (Charts, Fortune 500) and New Jersey-based Hovnanian Enterprises (Charts, Fortune 500) both also reported losses in the most recent quarter.

No. 5 builder KB Home (Charts, Fortune 500) returned to an operating profit in its most recent quarter after an earlier loss, but its CEO warned in April that he expects the housing slump to get worse.

[8gamsby] 22/5/2007 21:46

My thoughts exactly judge. dont really want TWOD dropping below the £5 mark either.

[judge jury] 22/5/2007 20:42

The merger discount has narrowed even further to 3.4%. Further evidence that the merger will succeed. Good to see that it's mainly WMPY rising, rather than TWOD falling.

[judge jury] 22/5/2007 08:45

Of course you never know, but the improvement in the WMPY share price and the narrowing of the discount would suggest the the market is now betting that the merger will go ahead. Personally, I think the merger will produce more shareholder value in the long term (although a 575p bid would have been attractive for many in the short term).

[markpun] 22/5/2007 08:30

Welcome back Judge,

Thanks for your thoughts, what a shame no counter bid, but still you never know.

[judge jury] 22/5/2007 08:24

BTW TWOD goes ex-div on Friday (25th May)

[judge jury] 22/5/2007 08:15

Back from my hols and it looks like the merger will go ahead after all. As you suggest, reports in the Mail on Sunday suggest no counterbid from PSN. It was always going to be too problematic for them given 1) the scale (and likely share issue) 2) the fact that the US market continues to be difficult and that they know nothing about the US and 3) a few concerns over the UK market (is this the right time in the cycle to be betting the house?).

Shame really as it would have been fun to have some counter bid action. Really cant see any private equity house getting involved so it looks like Taylor Wimpey will be born. WMPY is still some 5% below the implied merger price, and this discount should be expected to narrow as the merger date approaches. The new entity should be a descent long term buy if the combination is sealed successfully (and cost savings achieved). My initial TWOD target is still 540p, which I would hope to see by Christmas. I also expect some chunky cash acquisitions in the US, which should add to earnings going forward.