FOXT, ALU, SFE | Mortgage rates | Second staircases in towers | Student rents
Foxtons Group (FOXT, 38p, £114m mkt cap)
High profile London estate and lettings agent. Q3 (Sep) update.
Guidance: “Overall, full year earnings are expected to be in-line with consensus [rev, £141.5m; adj op profit including intangible amortisation, £11.8m]. The group’s strategy of acquiring lettings businesses, coupled with organic Lettings growth, has protected profitability in a lower volume sales market to a far greater extent than in previous years”. Expecting a small net cash position.
Trading: Lettings rev YTD +18%, £81.3m (Q3 vs Q3 22, +8%); Sales -18%, £26.9m (-17%); Financial Services -12%, £6.6m (-13%). “As guided in the interim results, the rate of rental price growth moderated compared to the previous two quarters, reflecting more normalised supply and demand dynamics. Sales volumes have continued to outperform the market with significant market share gains3 delivered in the quarter. Market share gains and other operational improvements enabled a 6% increase in Q3 viewings, compared to the prior year, and drove good Q3 under offer rates, which were only 4% lower than the prior year against a significantly weaker market backdrop. Furthermore, despite a 5% decline in property values across the market, the Foxtons average exchange price remains flat as a result of gaining market share in higher value properties”.
The Alumasc Group (ALU, 144p, £52m)
Sustainable building products, systems and solutions provider. AGM.
Guidance: “Despite well-publicised market headwinds, trading has remained resilient, and performance in the first quarter of FY (Jun) 24 has been in line with the Board’s expectations”.
Trading: “As expected, demand remains subdued in a number of construction sectors, particularly in new build residential. Offsetting this, the group has seen an increase in overseas sales, including a resumption in deliveries to the Chek Lap Kok airport expansion project in Hong Kong. Demand for new products launched in the Housebuilding Products division in the last eighteen months has also been robust, helping to mitigate the general slowdown in new housebuilding activity. The group continues to invest prudently in areas which enhance revenue growth and improve customer service, operational capability, efficiency and new product development. The group also continues to manage costs carefully and management have restructured the commercial and sales teams in the Water Management division. This will deliver annualised savings of around £0.8m, while simplifying the management structure and improving capability and customer service.
Outlook: “we are continuing to progress our strategy, investing in areas where we see growth opportunities while controlling costs prudently where appropriate. With a strong balance sheet and a product portfolio which delivers environmental benefits to our customers, we remain well positioned to benefit from the eventual recovery in our end markets.
Safestyle UK (SFE, 1.6p, £2.2m)
UK manufacturer, recycler and distributor of window, door and roofline PVC products. Process update. “In the 10 October announcement the Company confirmed that it was in a process which may include a capital injection or new financing, a potential sale of the shares in the subsidiaries and/or a sale of the business and assets of the subsidiaries. Based on discussions to date, the Company does not expect to be in receipt of a capital injection or new financing into Safestyle. However, the Directors are in active discussions with a shortlist of interested parties as part of the Process. These discussions focus on a sale of some or all of the Group’s business and assets. The Company is working with these parties towards concluding these discussions as quickly as possible. There can be no guarantee that these negotiations will result in the completion of a Proposed Sale, and, even if a Proposed Sale does complete, there can also be no certainty on the timings or level of return, if any, to shareholders”. Shares this morning so far have fallen by as much as 69% before recovering slightly.
Mortgage lending. The average cost of fixed-rate mortgages have continued their steady decline, while the cheapest available deals on 85% LTV five-year products have fallen to 5.00% for the first time since June, according to the latest weekly mortgage rates tracker from Rightmove. The spread between two-year and five-year fixed mortgages have continued to narrow, eg for a 95% LTV, 0.48% from 0.63% in mid-September, indicating improving confidence among lenders in the near term outlook for inflation.
In other news …
Building safety. The Government has set out plans to introduce a 30-month period of grace to allow developers to prepare for the second staircase rule on 18m-plus buildings, ConstructionEnquirer.com. The arrangements are hoped to avoid the hiatus in development in the London market when the Mayor Sadiq Khan pressed forward more rapidly causing schemes to be delayed by up to nine months or even mothballed. Housing Secretary Michael Gove said: “This means that, for some years yet, we will continue to see 18m+ buildings with single staircases coming to the market. I want to be absolutely clear that existing and upcoming single-staircase buildings are not inherently unsafe. They will not later need to have a second staircase added, when built in accordance with relevant standards, well-maintained and properly managed. I expect lenders, managing agents, insurers, and others to behave accordingly, and not to impose onerous additional requirements on single-staircase buildings in lending, pricing, management or any other respect”.
Student accommodation. Accommodation costs take up almost all the average maintenance loan received by university students in England, according to student housing charity Unipol, in a BBC report, increasing demand for further construction of student accommodation. In the last two years, average student rent has gone up by 14.6%, while maintenance loans have risen by 5.2%. Students are illegally doubling up in rooms and working, said Unipol, which researched the issue with the Higher Education Policy Institute. Average annual rent for students in England is £7,566, while the average maintenance loan received by students is expected to be £7,590 for the current academic year – leaving £24 a year to cover other essentials. Students can borrow up to £9,978 a year for living costs (£13,022 in London), but only people with household earnings under £25,000 are eligible for the maximum amount.
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