Taylor Wimpey: Encouraging trading statement. More to go for?
Taylor Wimpey's (74.5p and 4.5% of the JIC portfolio) trading statement for the year ended 31st December 2012 is excellent. The Company says that it expects full year results to be at the top end of expectations with Group operating profits up over 40%. Margins for the whole year were strong; ahead of the 11.1% achieved in the first half.
Market conditions are described as being stable and the Company says its starts 2013 in an excellent position with its 31st December 2012 order book some 14% higher than a year ago at £948m. The Company continues to prioritise margin performance over volumes.
In its outlook statement the Company says that consumer sentiment towards the housing market is more positive than anything they have seen in recent times and that its "well positioned sales outlets, high quality land portfolio, increased order book and strong balance sheet give us confidence to target further improvements and create increased value for our shareholders in 2013 and beyond".
The stock is up 55% since it was added to the JIC portfolio last May. As a business it has performed well during a difficult time for the housing market and is well placed should there be a sustainable improvement in market conditions. Earnings per share are expected to grow by 25% in 2013 and 35% in 2014. At 74.5p the shares are valued at 12.5x 2014 earnings and I think can make further progress especially as I suspect there may be some upward revisions to forecasts on the way. Happy holder.
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On 1st January 2012 I set up the JIC portfolio with £151,110 cash.Under "Transactions" you can see how it has been invested, "Portfolio" shows the current portfolio and my approach to investing is described under "About Me". A history of all my postings can be found under "Company Blogs". I… ...read more or visit website »
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Taylor Wimpey plc is a homebuilding company. It is a residential developer with operations in the United Kingdom and Spain. The Company is divided into three operating divisions: Housing United Kingdom, Housing Spain, and Corporate. The Company’s North Division covers Scotland, the North East, the North West and the West Midlands. Its South Division incorporates the Company’s businesses in the East, South East, South West and South Wales. The Company builds a range of homes in the United Kingdom, from one bedroom apartments to five bedroom houses. Housing Spain division has operations on the Costa Blanca, Costa del Sol and the island of Mallorca. During the year ended December 31, 2011, the Company completed a total of 10,180 homes in the United Kingdom. In 2011, it completed 109 homes in Spain. Its homes in Spain are sold under the Taylor Wimpey brand. On July 13, 2011, the Company disposed off its North American business. more »
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Taylor Wimpey (82p and 3.7% of JIC portfolio); Results for 2012 published this morning confirmed the good news outlined in the 14th January trading statement. UK operating margins improved to 11.5% from 9.0% in 2011. Operating profits were up 44% at £230.1m and earnings per share came in at 4.7p (2011 2.1p) compared to consensus forecasts of 4.1p. Net debt was reduced to £59m compared to £116.9m in December 2011. Good news also on the dividend front with the final dividend up 13.2% to 0.43p.
Current trading is encouraging with an order book of £1,076m at 24th February compared to £982m in February 2012. The Company says that;
"sales rates and visitor trends have improved in recent weeks, particularly in the South and Midlands, and we have seen a noticeable increase in the number of NewBuy reservations in the first eight weeks of the year."
They go on to say that they have seen an improvement in mortgage availability in the last few months which combined with a tentative improvement in consumer confidence , gives ground for cautious optimism in the short term.
Conclusion: The shares stand at a significant premium to nav per share of 61.5p but I think that in the short term the market will focus on improving profitability.. On consensus forecasts for 2013 the shares are valued at c14.5x earnings for 19% growth and 11.4x 2014 earnings for 28% growth. Shares are up 70% since bought last May. Happy Holder!
Reduced holding to 2% taking advantage of post budget move up to realsie some profits. Shares up 38% so far this quarter. Hope to add on a fallback.
www.JohnsInvestmentChronicle.com