Taylor Wimpey Share Discussion Threads

[valedo] 16/1/2014 08:53

Tempus in todays Times: dividend may hit nail on head

To the list of housebuilders that have more money than they know what to do with can be added Taylor Wimpey. The company ended last year with a small amount of cash in the bank, which is an inefficient use of capital.

Investors, therefore, are promised more news on the company's "capital allocation approach" with the full-year numbers on February 26.

I leave it to the politicians to decide on the appropriateness of this, given the huge boost the housebuilders have had from various government stimuli, the most successful being Help to Buy.

Taylor Wimpey investors, though, will be aware that they had to stump up £530 million in a rights issue in May 2009 to keep the company afloat, so this is at least a partial payback. The company is giving no further details, but on the assumption that a gearing level of about 25 per cent is appropriate, the sum involved could be in the region of £200 million to £250 million.

It might not be the last. By some measures Taylor Wimpey's trading update lagged behind recent ones from Persimmon and Barratt Developments, but there is plenty more fuel in the tank. Total completions last year were up by 7 per cent to 11,696. Average prices on private homes rose by 7 per cent to £210,000. The order book rose by 27 per cent to £1.2 billion. Most notably, the company says that the average selling price it expects to get from houses in that order book is up by 20 per cent.

A couple of percentage points of that is industry inflation. The rest is changing mix, building family homes instead of flats and concentrating on the better locations.

A chunk of this rise is the effect of building on cheaper land bought since the financial downturn. Although its margins are not the highest in the industry, they have been rising steadily to 13.1 per cent at the halfway stage and Taylor Wimpey has indicated they will be higher again at the full-year stage.

The company added more than 10,000 plots to its landbank, almost keeping pace with completions. It has about ten years' supply in that bank, about six years of this with planning permission, at the top of the range in the sector.

The only worry is that, with its peers all chasing land, prices may start to rise again, at the expense of those margins.

The shares, off 2p at 117¾p, have not done much since the summer and sell on 13 times earnings. That cash hand-back could give them another lift.

[5uperman] 15/1/2014 15:28

these are gonna fly ...BUY..BUY ...BUY NOW...

[tiger20] 15/1/2014 11:49

hillbrown

I still hold 50% of my stake in Wimpey -but the report this morning was borderlining on the bland side -no fire in his belly,still holding BDEV/RDW/SMP/SHI/TPK.

[hillbrown] 15/1/2014 08:55

The comment about lack of completions is a red herring.

Going forward is all about trends upward in selling prices and higher in margin.

In an environment of low cost of capital, increasing selling prices and higher margins the eventual return on capital will increase.

The key issues at the moment are bricks and bricklayer availability in particular and availability of trades in general.

Its also good to see the message that we can expect big hikes in dividends.

This is my biggest single holding of shares and I can see no reason to sell. I am already over a onebagger and expect this to go to a triple bagger (1.65 for me) in about a year or 15 months time.

[tiger20] 15/1/2014 08:42

Sold 50% of my holding bought at 34p so happy - bought THRG 7% discount to NAV

[aquadave99] 15/1/2014 07:58

Personally not worried about completions at all. As long as revenue and profit are rising in line with other builders I have no problems. If it does dip today I might add some.

[lateralam] 15/1/2014 07:55

I'm not worried about completions in 2013. Old news. 2014 is going to be a bumper year for UK housebuilding. I work in the industry but not for a developer. The pipeline for the coming year is huge for pretty much all of them.Dyor etc

[gbh2] 15/1/2014 07:44

Wordy Update but I'll wait for the for the detailed results in February before deciding on whether to keep building or consider reducing my holding.

[koetser] 15/1/2014 07:44

Tiger agree with you

[tiger20] 15/1/2014 07:34

Results look okay but completions could be better-may sell today

[gbb483] 15/1/2014 07:25

There should be a lot of work in Spain to rebuild the houses the authorities decide to knock down.

[knocknock] 15/1/2014 07:10

Excellent update in particular the reduction in interest expected during 2014, the fact Spain operations are turning a profit and the coming to fruition all those canny land purchases during the leaner years.


Well done TW. And at current PE must be one of the most undervalued of the larger HBs

[aspers] 15/1/2014 07:09

Well I bought last Feb at 75p my own target was 140p by March 2014. My new adjusted target will be 200p by the start if 2015. All the builders are now no brainers for the foreseeable future :-)

[skinny] 15/1/2014 07:02

Significant improvements delivered in 2013

Taylor Wimpey is issuing the following update on trading ahead of its full year results for the year ended 31 December 2013, which will be announced on 26 February 2014.

Overview
We expect to deliver significant improvements across all of our key strategic objectives in line with our expectations.

Pete Redfern, Chief Executive, commented:

"We saw a meaningful step change in market conditions in 2013, after several years of a declining or flat market. In these improving conditions, Taylor Wimpey is benefitting from the discipline that has been instilled over the past five years with a clear focus on margin as the best measure of the quality of our business. Focussing on the long term health of the business allows us to take the right decisions today to deliver much needed homes all the way through the housing cycle."

UK current trading
During 2013, we saw a measurable improvement in the housing market underpinned by solid consumer confidence, together with Government measures, in particular Help to Buy, which have helped address the significant unsatisfied demand for housing through increased access to mortgage availability and affordability.

Total home completions increased by 7% to 11,696 (including our share of joint venture completions) up from 10,886 in 2012, of which 18% were affordable housing completions (2012: 18%). Our net private reservation rate for the full year was 0.62 homes per outlet per week (2012: 0.58) with very low cancellation rates at 13% (2012: 15%). Help to Buy continues to prove popular with our customers and, during 2013, we worked with over 2,900 households to take their first step to move onto or up the housing ladder using this initiative.

Average selling prices on private completions increased by 7% to £210k (2012: £197k). This increase is the result of our underlying shift to better quality locations and the market sales price increases in line with the general level of inflation that we saw in the second half of 2013. Our overall average selling price has increased by 6% to £191k (2012: £181k). In current market conditions, we expect to be able to deliver further increases in the number of completions and average selling prices in 2014 and remain confident of driving an improvement of 200 to 300 basis points to operating margin in 2014.

At this point in the cycle, and relative to the size of the business, the total order book is at the optimal level. We start 2014 in an excellent position with an increase of 27% in value to £1.2 billion as at 31 December 2013 (31 December 2012: £948 million), with further inherent margin improvement driven largely by the strength of private reservations. The order book represents 6,627 homes (31 December 2012: 5,966 homes).

Land portfolio, planning and outlets
The land market remained relatively stable throughout 2013 and we were able to secure value creating opportunities in both the short term and the strategic land markets. Our strategic land performance was particularly strong in 2013 and we added over 10k plots in 2013 to bring the total strategic landbank to a record level of over 110k including pipeline plots. We approved the purchase of 15,667 new plots on 105 new sites during 2013 (FY 2012: 14,172 plots on 112 new sites) at the high margin levels that we have been able to achieve over the last two years. As previously indicated, we continue to see attractive opportunities in the land market, albeit we have seen initial signs of tightening in some local markets which we continue to monitor very carefully, retaining our focus on value in these conditions.

We enter 2014 with 314 outlets (31 December 2012: 327), with the decrease due to faster outlet closings in a healthier market and the time taken to meet additional planning permission requirements. We expect total outlets to modestly increase in 2014 as we continue to focus our efforts on getting our newly acquired sites and phases opened in an efficient and timely manner.

Spain current trading
During 2013, we completed 118 homes (2012: 156) at an average selling price of £194k (2012: £197k). We anticipate that average selling prices will naturally increase in 2014 with increased completions from our newly acquired sites, which are performing very well due to their quality locations. The total order book stands at 195 homes (31 December 2012: 53 homes). Customer confidence still remains subdued on the whole and in certain locations continues to be extremely challenging. The Spanish housing business again made a small profit during 2013.

Group financial position
Full year Group operating margin will be towards the upper end of our expectations, ahead of that reported at the half year, and over 200 basis points ahead of FY 2012 operating margin (H1 2013: 13.1%; FY 2012: 11.2*%).

On 31 December 2013, at the first call date, we redeemed and cancelled the £250 million 10.375% Senior Notes due 2015, of which £149.4 million remained outstanding. This will reduce interest costs in 2014 by over £15 million. As a result of the redemption, our £100 million term loan has been extended by 5.5 years to mature in 2020 with amortisation beginning in 2017.

We are pleased to report that we ended the year with a marginal net cash position, largely as a result of outperformance in underlying trading, but also due to the timing of land and other payments (31 December 2012: £59.0 million net debt; 30 June 2013: £68.4 million net debt). As part of our medium term strategy we continue to generate cash as we approach our optimum scale and we will give a fuller update on our capital allocation approach for 2014 and beyond with our full year results on 26 February 2014.

Outlook
We enter 2014 with an excellent order book, with improved margins and pricing and a very strong set of selling locations. In addition to the improved mortgage environment, the level of consumer confidence in housing has improved across most of our main markets and in the opening weeks of 2014, interest levels, visitors and reservations have remained high.

Looking further ahead, we have been able to secure very high-quality short term land over the past four years, and build an exceptionally strong strategic landbank, which positions us well over the medium and longer term. The planning environment in the UK remains generally quite slow and cumbersome, although the changes over the last three years are starting to have a positive impact. We remain committed to bringing all of our sites through the planning process and developing them to create value for our shareholders and deliver much needed homes for the communities in which we operate.


* 2012 has been restated following the adoption of IAS19R 'Employee Benefits', with changes in the presentation of certain costs relating to the defined benefit schemes.
This trading update may contain certain statements about the future outlook for Taylor Wimpey. Although we believe our expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.


-Ends-

[homeboy35] 14/1/2014 23:38

over 2 quid for the Wimp?

That's worth a year off in sunnier climes!

[trystano] 14/1/2014 23:32

eenyweeny & El1te, thanks for the charts, much appreciated.

[eenyweeny] 14/1/2014 22:03

FAO El1te, I've followed your link, nice stuff! I will visit again! Cheers

[eenyweeny] 14/1/2014 21:56

If it is any any guidance as to my intentions, I have a large holding of TW. and I too am looking for upside price targets of 134p and then onwards to 205 for some well earned sideways/resting until the next UK General Election is complete, then I will rethink.

[homeboy35] 14/1/2014 21:50

My eyes are going funny......... but nice to see me LLoy and TW. graphs!

[el1te] 14/1/2014 21:49

Tried to post the chart here but couldn't. Luckily I have the volume charts on my site (with permission of ADVFN of course!)



Good luck tomorrow all holders

[knocknock] 14/1/2014 19:45

gbh2 give it up mate ,you're making yourself look even more foolish than you may be, if that is possible.

[gbh2] 14/1/2014 15:23

Excellent update from Barrats this morning but had little affect share price up 1%+ ATM!

[el1te] 14/1/2014 15:13

Tomorrow - as a trading statement

Check their corporate calendar for the rest of the dates (type into google and it should show up)