Barratt Developments plc (LON:LON:BDEV) is expected to follow in the footsteps of its housebuilding peers by defying Brexit fears with a positive trading update.
Taylor Wimpey plc (LON:TW. and Persimmon plc (LON:PSN) last week reported a good start to the year in their trading statements as strong demand for homes continued to outstrip supply.
The industry has proved resilient since the UK voted to leave the European Union last June, supported by a shortage of housing, attractive mortgage rates, good employment levels and government policies to build more homes.
Numis expects Barratt will report robust trading, healthy demand for new homes and enough house price inflation to cover rising imports costs due to a weaker pound. However, the broker noted that Barratt is exposed to decline in prices in London’s prime real estate.
“We think the one headwind the group will be seeing is trading through its high-end London exposure, which will remain an issue through both 2017 and 2018,” the broker said.
“Elsewhere, we will look for any commentary from the company regarding its potential to improve EBIT margins (something we think the company is heavily focused on) , which lag most other companies in the sector.
“We think if Barratt can close even half the 500 basis point gap between it and some of the better performing companies in the sector then it will be able to show greater earnings growth than other FTSE 100 housebuilders and rebuild its return on equity which should have positive valuation connotations.”
At its first half results earlier this year, Barratt said current trading was strong with record total forward sales as at February 19, totalling £3.018bn, up 17.0% year-on-year – at the start of January forward sales had been £2.3bn, up 16%.
TalkTalk posts full year results under new management....
TalkTalk reports its final results with Deutsche Bank expecting underlying profits (EBITDA) of £323mln and a final dividend of 10.58p.
The results will see Charles Dunstone take the helm as the new chairman and Tristia Harrison become chief executive following the departure of Dido Harding. Harding left after seven years in charge amid mounting concerns about the deterioration of TalkTalk’s consumer broadband business.
The company’s market share has fallen as larger rivals BT and Sky have added millions of new customers.
TalkTalk’s new team has indicated that pricing will be a key growth driver going forward alongside acquisitions.
“Depending on ambition the Co could also trade investment with shareholder returns, though we expect FY17 div expectations to be delivered,” said Deutsche Bank.
Recent regulatory proposals will be beneficial for TalkTalk, the broker added. The German bank said that a proposed reduction in virtual unbundled local access is worth £30mln and will allow TalkTalk to improve volumes, expand profits, or a combination of both.
Wednesday 10 May
Interims: Compass Group PLC (LON:CPG)
Finals: Talktalk Telecom Group PLC (LON:TALK); Braemar Shipping Services PLC (LON:BMS); Warpaint London plc (LON:W7L)
AGM / EGM: Barclays PLC (LON:BARC); ITV plc (LON:ITV); Aviva PLC (LON:AV.)
Trading Statements: Novae Group PLC (LON:NVA); Vesuvius (LON:VSVS); National Express Group PLC (LON:NEX); ITV plc (LON:ITV); Barratt Developments PLC (LON:BDEV)