Taylor Wimpey (TW.) was one of the last major house builders to recover from the economic downturn, but it has now arrived in style. A predictably strong performance last year has been accompanied by some sensible steps designed to preserve a sustainable business model.
In deference to the cyclical nature of the housing sector, Taylor Wimpey is placing greater emphasis on the husbandry of its land bank. Having added 18,770 plots to the short-term consented land bank, roughly half through purchases and half by pulling plots through from the strategic land bank, it now has 70,000-75,000 shovel-ready plots. Management consider this the optimum size to maintain a sustainable business.
Replacement plots will still be needed, but as the group returns to a more neutral replacement ratio, funding requirements will fall significantly. This will help to generate a sizeable cash surplus from the second half of this year, and the group has already turned a net debt into a net cash position. Shareholders will see an immediate benefit with the payment of a special dividend in July worth 1.54p per share - to be followed next year with a 6.16p special payout.
Analysts at broker Jefferies are forecasting pre-tax profits of £410m and EPS of 10p for 2014 (2013: £268m and 6.7p).
| TAYLOR WIMPEY (TW.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 123p | MARKET VALUE: | £3.99bn | |
| TOUCH: | 122-123p | 12-MONTH HIGH: | 133p | LOW: 77p |
| DIVIDEND YIELD: | 0.6%* | PE RATIO: | 16 | |
| NET ASSET VALUE: | 69p | NET CASH: | £5.4m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 2.60 | -0.7 | -25.1 | nil |
| 2010 | 2.60 | -0.1 | 8.1 | nil |
| 2011 | 1.81 | 78.6 | 1.8 | 0.38 |
| 2012 | 2.02 | 204 | 7.2 | 0.62 |
| 2013 | 2.30 | 306 | 7.5 | 0.69* |
| % change | +14 | +50 | +4 | +11 |
Ex-div: 09 Apr Payment: 21 May *Excludes proposed special dividend of 1.54p a share | ||||
