Property & Construction Daily

The Property & Construction Daily provides a sector-specific comment from leading analyst Alastair Stewart. His daily perspective provides a round-up of market statements, news, economics and views from the property and construction sectors.

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April 23, 2024

WJG, TW., TPFG

Company research

Watkin Jones (WJG, 40p, £104m mkt cap) – WJG is a client of PERL

Residential for rent developer and manager in the build-to-rent (BTR) and student accommodation sectors. HY (Mar) trading update. Link to Progressive Equity Research note, H1 in-line amid reviving investor appetite: “Watkin Jones’s guidance for FY24E is unchanged in its trading update for the first half to 31 March. We maintain our forecasts for the full year and introduce half-year estimates, in line with reiterated guidance that performance will be significantly H2 weighted. The group confirms a continuing gradual recovery in appetite among institutional investors to forward fund its build-to-rent (BTR) and student developments. We believe this should gather pace as the direction of interest rates becomes clearer.”

Company news

Taylor Wimpey (TW., 132p, £4,679m)

Top five UK housebuilder by volume. AGM. Guidance: “The spring selling season is progressing in line with our expectations. We remain on track to deliver our guidance for FY [Dec] 2024 while ensuring we are positioned for growth from 2025, assuming supportive market conditions. We continue to expect 2024 UK completions (excluding JVs) to be in the range of 9,500 to 10,000, with completions weighted 45% / 55% in favour of the second half. As previously guided, the 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%”. Trading: Private sales rate YTD to 21 April, 0.73 per outlet per week (2023, 0.75), with a cancellation rate of 13% (2023: 15%). Excluding bulk sales, 0.69 (2023: 0.66). As at 21 April, total order book, -10% 7,686 homes. Short term landbank, c. 81k plots (c. 86k plots). “We remain selective in our approach to new [land] acquisitions but will be active where we see opportunities that balance risk, reward and returns. In the year to date we have approved c. 1,400 new plots.

Outlook: “Looking ahead, we remain well positioned in an attractive market with significant unmet demand. Our strong landbank and clear strategy enable us to build high-quality homes, create thriving communities and drive value for our stakeholders through the cycle and into the long term”.

The Property Franchise Group (TPFG, 345p, £215m)

Franchised lettings and estate agent group, enlarged through the recent acquisition of Belvoir Group, also operating hybrid web-based EweMove platform. FY (Dec) results. Rev +0.4%, £27.3m; PBT +2.3%, £9.0m; adj EPS unch, 28.4p; div +7.7%, 14p; net cash, £5.1m (£1.7m).

Trading: Lettings management service fees +11%, £9.9m; Sales +4%, £23.1m; managed lettings portfolio +3%, 78,000 rental properties. EweMove sold 31 new territories (44), with total territories under contract 189 (189). Pro-forma combined TPFG and Belvoir FY 23 rev +1.0%, £61.5m; PBT +1.0%, £18.1m.

Outlook: “The combined group will benefit from increased scale and geographic reach, operating more than 910 outlets in franchised territories, managing in excess of 153,000 tenanted residential properties across the UK, selling more than 28,000 properties per year and advising on the completion of over 21,000 mortgages through its network of approximately 310 advisers. Q1 has been ahead of management’s expectations in terms of both revenue and profitability. The lettings market continues to grow at pace, with anticipated growth in sales revenue in 2024 amidst an improving sales market”.

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