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Immigration will be very low this year, next year too most likely, maybe for the foreseeable future as even if a vaccine works suggestions are those in the poorest countries will not be getting a vaccine.
We have a low household size compared to other nations, demand is due to want not need.
Unemployment high
Exodus of skilled due to Brexit
Cramped estates at 15 houses per acre in commuter zones will not be doing well going forward.
150,000 houses a year,hardly "booming" I think.Lloyds oracle states "unemployment will peak in 2021 at 12.5%,national income will shrink by 17.7% this year,and house prices will fall by just under 30% over a 3 year period".Not a good omen.Hard times ahead for the economy,and the housing market in particular.We are heading deeper into recession,and there is nothing anyone can do about it.
NAV for end 2020 is set to be 112p, while gearing 3.5%, so a strong balance sheet compared to sector average in particularly. technically, the gap to 117p has been filled but a close below 117 would suggest a return to 100p. otherwise, 130p is a possible target in the next couple of months if 117p holds.
The 500 million £ placing was at 145p. The price seems to have fallen every day since....even though the government is pouring money into building / stamp duty cuts. Where is the low? Not here I think. Countrywide CSP is the same. Lower and lower and yet the house mkt is booming.
Impairment is not debt
debt
Today's price doesn't matter, in a few years the SP will be much higher. North of 500p. I'll keep on buying the dips.
91p target or whatever NAV is.
Re Pete Redfern "Maybe he will survive" comment. Now that's something I would invest in. He single-handedly saved this company from the wolves in 2008, and everything that has come our way since then is down to him. OK so the short-term (3-5 years) performance has been poor, but it's been poor for all the builders. This current health crisis has been described as 10x worse than the financial crisis of 2008. Share price then: 4.4p, share price today: £1.16. That tells you everything you need to know about Pete Redfern's stewardship of this company and I for one hope he chooses to continue for many more years yet.
Finally, listening to the analysts call PR was unusually hesitant and was not very convincing. He also cut the call before all analysts had finished asking questions. Maybe he will survive, or maybe enough investors will take the companies performance up with the new Chairman (woman). Time will tell.
I suspect Wimps are walking a fine line here, it’s true that better terms can be had for land given where we are with COVID. However, Wimps already had the largest land bank in the industry so why the rush to add to that when the future is uncertain. Wimps strategy was to move to larger sites, which generate better returns over the long term in a stable market, at the cost of being more flexible when the market gets choppy. Individuals more cynical than I might conclude that they desperately needed to re balance their short to mid term site options, or risk being stuck which the wrong products in the wrong locations.
The strategy was also to pay out All excess cash as dividends (specials) that was not needed on a day to day basis, leaving no cash to cope with changing market conditions. Hence a cash call.
Ironically after paying out all excess cash, they are had to ask for it back with a cash call. IMHO.
I think it will be interesting to see in the future what the cash raised is spent on .as from looking at the cash they have available they can’t afford extra land and will need the cash for day to day running.
Obviously not that simple:
Impairments of land bank would only result in an impact to assets resulting in a negative asset position on the balance sheet. This would not impact their going concern status unless their loan or credit facility were dependent on their net asset position. If that was the case they have been disingenuous and raised for this reason not land.
How does a negative balance sheet take a company under?
They would go under if they had insufficient liquidity - cash.
er no. They had to share up the balance sheet after having to take a massive hit against the value of the land bank. If the the shareholders had nt supported the massive rights issue the company would have gone t£ts up. simple
DGR - if they didn't have constrained capital why did they raise money? For the fun of it?
They clearly had insufficient funds to do what they wanted ie constrained. They would have had to go into their credit facility otherwise.
Define cheap prices, cheap relative to what? Cheap relative to last March, to next March? They raised money ostensibly to purchase land, time will tell if it is 'cheap'.
I was commenting regarding ROCE.
My first investment in this company was at 11p (Barretts at the same time at 39p) after the financial crisis in 2008. Sold out way too soon! Don't think it will go that low lol
I think you are right dvh.My thoughts exactly.
DGR1980 - if they had been properly managed they would not have had to raise capital and would have had cash on the balance sheet. Tony Pidgley may he rest in peace, new the housing market was cyclical and as well as offloading huge amounts of shares over the last few years, built up a cash reserve. We are long overdue a housing market correction and this is just the beginning. Taylor Wimpey are a risk, ignore the fact the director participated in the fundraise, he will no doubt have this amount covered when share options get awarded.
Wbernard - NO. They did not have to raised because of constrained capital.
They raised because of an opportunity to increase their landbank at cheap prices
Supercharger - ROCE is what they are really interested in. You can push this up more by building faster than by holding on for a revenue uplift which may or may not happen. TW have constrained capital (why they had to raise recently, so faster selling is the best way to raise returns.
Howdy dv
Mark, what makes you so optimistic about the prospects here? I was looking at sub 100p by the year end when it finally dawns on folks what a complete mess this country is in. gl
Looking like it will test the 102-106 range
If they take longer building the houses and the prices are rising a house builder makes even more money. Our local village builder used to allow his craftsman builders take as long as it took to build his houses in a rising market as if it was a favour - but he made even more money when they came to sell. If TW have taken longer to complete new houses in a rising market and the latest figs are houses prices up 3.3% for July then they will make more money going forward than if they had built them quicker in the first place.