23rd Apr 2024 10:34
(Alliance News) - Taylor Wimpey PLC could reward investors prepared to stick out near-term uncertainty in the UK housing market, an analyst on Tuesday said.
The Buckinghamshire-England housebuilder is holding its annual general meeting on Tuesday.
Ahead of that, it said the Spring selling season is progressing as expected, allowing it to confirm its guidance for 2024.
Taylor Wimpey said its net private sales rate from the start of the year to this past Sunday was 0.73 per outlet per week, down from 0.75 a year earlier, with a cancellation rate of 13%, down from 15%. Excluding bulk sales, its net private sales rate rose to 0.69 per outlet per week from 0.66.
Traffic to its website was "encouraging", and there are "good levels of visitors to our sites despite some market uncertainty and affordability challenges for some customers", the company said.
Lenders continue to be "supportive" and mortgage rates "remain competitive" and below last year's highs, Taylor Wimpey added, with "good" product availability.
As of April 21, Taylor Wimpey's order book stood at GBP2.09 billion, representing 7,686 homes. This is down from GBP2.38 billion and 8,576 homes a year earlier.
"We have made a good start to 2024 with the Spring selling season progressing as expected. While we are mindful of ongoing market uncertainty and affordability challenges, it is pleasing to see continued market stability supported by good mortgage availability and sustained customer confidence," said Chief Executive Officer Jennie Daly.
Looking ahead, Taylor Wimpey said it continues to expects 2024 UK completions, excluding joint-ventures, of between 9,500 to 10,000 homes, with completions weighted 55% in favour of the second half of the year.
"As previously guided, first half operating profit margin will reflect slightly lower pricing in the order book and build cost inflation embedded in work in progress of around 4%," the company said.
Aarin Chiekrie, equity analyst, Hargreaves Lansdown noted despite the UK housing market sitting on "uncertain ground", Taylor Wimpey's made a solid start to 2024 with the Spring selling season progressing as expected.
"Affordability pressures remain a key issue to wrestle with, but the group called out good mortgage availability and sustained consumer confidence as tailwinds supporting firm levels of buyer interest," the analyst noted.
Chiekrie explained that tough trading conditions in 2023 saw revenue and profits fall significantly.
Back in February, Taylor Wimpey reported that pretax profit declined 43% to GBP473.8 million in 2023 from GBP827.9 million a year prior, as revenue fell 21% to GBP3.51 billion from GBP4.42 billion.
"But this rebase lower makes for easier comparative numbers moving forward, and Taylor's trading early in the new year has shown some positive signs," Chiekrie said.
He noted a combination of real house price declines and lower mortgage rates have eased affordability pressure a little, resulting in a marginal uplift in sales rates.
"However, despite the trends of a modestly improving market, buyers are likely to remain sensitive to price going forward, so it was unsurprising to see management remain cautious and hold full-year guidance firm in today's update," he added.
"All in, Taylor Wimpey looks to be one of the better-placed UK housebuilders, and the current valuation could be an attractive entry point for investors willing to ride out near-term uncertainty in the housing market," he suggested.
Shares in Taylor Wimpey were up 0.5% to 132.90 pence in London on Tuesday morning.
By Jeremy Cutler, Alliance News reporter
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