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Taylor Wimpey completions pushed to 2021

The housebuilder fell to a pre-tax loss as lockdown caused completions to collapse during the first half
July 29, 2020

A collapse in completions of more than half and an increase in costs associated with dealing with the pandemic forced Taylor Wimpey (TW.) into a pre-tax loss during the first half. While the weekly sales per site has picked up during the nine weeks since lockdown ended, delays will push fourth quarter completions into early 2021.

IC TIP: Hold at 123p

Raising £510m in June meant net cash balances declined by only 8 per cent to £497m - excluding lease liabilities - after a reduced number of completions was not enough to compensate for land creditor payments. However, net cash is expected to rise to between £550m and £750m. 

Since it restarted land buying in the second quarter, it has approved or contracted 26 land deals at a total cost of £346m. The focus is on smaller sites, which may deliver lower margins but typically generate a higher return on capital. Management said it can achieve a return of around 35 per cent on those recent purchases, but that will depend on to what extent sales prices fall further than its already “conservative” assumptions. 

The consensus forecast for net asset value at the end of December 2020 is 112p a share, rising to 113p in the following year. 

TAYLOR WIMPEY (TW.)   
ORD PRICE:123pMARKET VALUE:£ 4.51bn
TOUCH:122.95-123.05p12-MONTH HIGH:238pLOW: 101p
DIVIDEND YIELD:NILPE RATIO:10
NET ASSET VALUE: 103pNET CASH:£473m
Half-year to 28 JunTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20191.733007.43.84
20200.75-39.8-1.0nil
% change-57---
Ex-div:na   
Payment:na