Taylor Wimpey PLC (LSE:TW.)’s trading update was viewed in a more positive light by City scribes following yesterday’s downbeat statement from industry peer, Persimmon PLC (LSE:PSN).
Peel Hunt said “after yesterday's bleak statement from Persimmon, Taylor Wimpey's update today is more confident and less alarming.”
The FTSE 100 listed builder still reported falling sales and increased cancellation rates but maintained full-year guidance for operating profits of around £922mln.
AJ Bell investment director Russ Mould said: “The major contrast with Persimmon’s latest missive is Taylor Wimpey made no hints about having to rebase the dividend, although that may still come as the group looks to lay the foundations for a recovery when the housing and mortgage markets stabilise.”
In terms of sales, net sales rates dropped to 0.51 in the second half at Taylor Wimpey below the levels reported by Persimmon yesterday of 0.6 but cancellation rates were lower (24% against 28% at Persimmon).
There was also nothing new from the company regarding cladding provisions unlike its fellow builder.
Broker Liberum said this was reassuring and “in the context of Persimmon yesterday announcing an increase in its cladding provision, from £69mln to £350mln.”
The broker also pointed out Vistry management said in the Countryside prospectus that cladding provisions might be 10% to 15% higher in Vistry and up to 20% higher in Coutryside.
Peel Hunt noted the fall in sales and increased rates but said site numbers are edging ahead rather than declining.
“Customer visits to websites continue at good levels, and reservations from customers who had locked in mortgage rates are still robust” it pointed out.
Both Liberum and Peel Hunt have buy ratings on Taylor Wimpey.
Peel Hunt pointed out the shares have dropped 46% year to date, in line with the sector decline of 44%. On unchanged forecasts it said the shares are trading on a PE of 6.0x with a dividend yield of 11.2% which is 1.5x covered.