Taylor Wimpey (TW.)

[Dod101]

It seems that not many platforms, if any, are geared up to work with PrimaryBid. It would put another link into the chain and so slow things up a bit more. I asked, since Richard Wilson, CEO of Interactive, signed a petition on the subject of placings, whether II were going to work with PrimaryBid but they said they had no plans to.

Dod

[Wizard]

https://www.investegate.co.uk/taylor-wimpey-plc--tw--/rns/proposed-placing-of-ordinary-shares/202006171638202853Q/

"We have taken decisive and early action to conserve cash and increase flexibility through the COVID-19 pandemic and we are now seeing a significant opportunity to invest in land at attractive prices. We are today launching an approximately £500 million equity raise from a position of strength, to enable us to take advantage of these near term opportunities. These investments will support sustainable future growth and deliver enhanced, long term value to shareholders. "


"Over recent weeks, the Company has agreed terms and approved the acquisition of 12 sites with a broad geographic spread at an operating profit* margin above the Company's medium term target of c.21-22%, and an average return on capital employed** of c.34%"

I find that final quote interesting. They may have a view on the likely margin on the sites and the ROCE, but they can't know them for sure, they are projections at best. Were all the sites bought with full planning consent and all pre-commencement conditions discharged? If not they do not know what they can build and at what cost. Even if they were there will be an assumed sale price for each unit and if TW have not forecast the housing market correctly out to the point where all units are sold it can make a very big difference.

Amongst other things I do a bit of property development and there have definitely been opportunities since March to acquire sites at a good price. But I would be surprised if the type of sites that I am looking at would have any interest for Taylor Wimpey. We have just bought somewhere and I am sure the fear of not being able to find another buyer when viewings were banned, etc. played a part in the sale going through at two-thirds of the price initially asked by the seller. Sellers of sites that Taylor Wimpey will be looking at are unlikely to be in a similar situation to the seller we dealt with, if they are then these twelve sites will be very small for a company of Taylor Wimpey's size. But then they spoke about geography and percentages with no mention of size, so maybe...

[Bouleversee]

I heard that lenders are requiring a l5% deposit from people borrowing for house purchase because prices are expected to come down. I wonder whether TW has factored that into their calculations. Young people will find house purchase very difficult without the bank of Mum and Dad and the latter may not be able to be so generous now that so many of their dividends have been axed and the value of many of their holdings has dropped so much. A bonanza for the sprogs of the very wealthy, of course.

As regards the placing, it doesn't look as though we have missed much as the placing price ended up at 145p per share and they closed at 143.50p. I find the whole process of placings bizarre and won't be taking part in any Primary Bid placings as I don't like pigs in pokes. Open offers following placings aren't much better.

[dealtn]

I heard that lenders are requiring a l5% deposit from people borrowing for house purchase because prices are expected to come down.

Do you have a source for that, I suspect that's a misinterpretation of any lender's policy?

[Bouleversee]

It was on R4 news either yesterday or this a.m. but I have just had a look in today's Times (which I hadn't yet had time to read) and there is an article headed "Homebuyers denied loans over negative equity fears": "Nationwide, which has 1.6 million customers, said that it would not accept new borrowers who had less than a l5 per cent deposit. It is the first big lender to warn about the dangers of negative equity, in which a borrower's mortgage is greater than the value of their home."

It is quite a lengthy article and goes on to talk about other lenders withdrawing 10% deposit deals and discusses risk of fall in prices and negative equity so it looks as though others may follow Nationwide's example. I hope that doesn't count as misrepresenation.

[dealtn]

It was on R4 news either yesterday or this a.m. but I have just had a look in today's Times (which I hadn't yet had time to read) and there is an article headed "Homebuyers denied loans over negative equity fears": "Nationwide, which has 1.6 million customers, said that it would not accept new borrowers who had less than a l5 per cent deposit. It is the first big lender to warn about the dangers of negative equity, in which a borrower's mortgage is greater than the value of their home."

It is quite a lengthy article and goes on to talk about other lenders withdrawing 10% deposit deals and discusses risk of fall in prices and negative equity so it looks as though others may follow Nationwide's example. I hope that doesn't count as misrepresenation.

OK as I said it is a misinterpretation. It isn't because they (or anyone) expect prices to come down it is because there is an increased risk of that being the case, which is subtly different.

All banks have to set aside capital against risk-bearing assets, for the majority of them that is model based with the models assessed by regulators. This capital is a direct cost to the banks, so as the risks change the costs change too. Like any business they can "re-price" their product, or in the case of banks they can also change the product.

From a business perspective banks might react differently but it would be entirely sensible for them to "withdraw" 90% mortgages, replacing them with an 85% product. Some might keep them but increase the "price", charging say 2.25% instead of 2%.

[Bouleversee]

I expect there is a subtle difference between hair splitting and nit-picking as well. Perhaps I should run my comments past a solicitor before posting, or just not bother.

[Wizard]

I heard that lenders are requiring a l5% deposit from people borrowing for house purchase because prices are expected to come down. I wonder whether TW has factored that into their calculations. Young people will find house purchase very difficult without the bank of Mum and Dad and the latter may not be able to be so generous now that so many of their dividends have been axed and the value of many of their holdings has dropped so much. A bonanza for the sprogs of the very wealthy, of course...

The proportion of young people whose parents have a material dividend income is very small, as I suspect is the proportion of young people who have a bank of mum and dad to turn to. The much, much bigger issue here is the mountain of Govt. borrowing being taken on as part of the response to Covid-19 that the young will be paying off for the rest of their lives. That is going to be a huge drag on the economy for a very long time to come.

[dealtn]

I heard that lenders are requiring a l5% deposit from people borrowing for house purchase because prices are expected to come down. I wonder whether TW has factored that into their calculations. Young people will find house purchase very difficult without the bank of Mum and Dad and the latter may not be able to be so generous now that so many of their dividends have been axed and the value of many of their holdings has dropped so much. A bonanza for the sprogs of the very wealthy, of course...

The proportion of young people whose parents have a material dividend income is very small, as I suspect is the proportion of young people who have a bank of mum and dad to turn to. The much, much bigger issue here is the mountain of Govt. borrowing being taken on as part of the response to Covid-19 that the young will be paying off for the rest of their lives. That is going to be a huge drag on the economy for a very long time to come.

Not particularly applicable to a Company News thread about Taylor Wimpey though. More of a Macro discussion worthy of discussing elsewhere maybe?

[Wizard]

I heard that lenders are requiring a l5% deposit from people borrowing for house purchase because prices are expected to come down. I wonder whether TW has factored that into their calculations. Young people will find house purchase very difficult without the bank of Mum and Dad and the latter may not be able to be so generous now that so many of their dividends have been axed and the value of many of their holdings has dropped so much. A bonanza for the sprogs of the very wealthy, of course...

The proportion of young people whose parents have a material dividend income is very small, as I suspect is the proportion of young people who have a bank of mum and dad to turn to. The much, much bigger issue here is the mountain of Govt. borrowing being taken on as part of the response to Covid-19 that the young will be paying off for the rest of their lives. That is going to be a huge drag on the economy for a very long time to come.

Not particularly applicable to a Company News thread about Taylor Wimpey though. More of a Macro discussion worthy of discussing elsewhere maybe?

Yes, true. But a longer term dampening of demand for houses will have an impact on Taylor Wimpey I would think. I was merely pointing out that the cut in dividends for a few well off TLF pensioners is not the thing that will potentially hit Taylor Wimpey as a result of Covid-19.

For the record I think what Taylor Wimpey has done is morally correct and if more companies did it I think it would be a good thing for the UK economy, which will benefit companies in the UK.

[idpickering]

Interims here; https://www.investegate.co.uk/taylor-wi ... 00073965U/

[idpickering]

Trading Statement

Here; https://www.investegate.co.uk/taylor-wi ... 00125906E/

[absolutezero]

Up 19% as I type...

[monabri]

Up 19% as I type...

I think there might just possibly be another reason

[absolutezero]

Up 19% as I type...

I think there might just possibly be another reason

Possibly.
Results announcements aside, never try to explain why the market does what it does.
It defies logic and most movements are random.

[Bouleversee]

Up 19% as I type...

I think there might just possibly be another reason

Possibly.
Results announcements aside, never try to explain why the market does what it does.
It defies logic and most movements are random.

Not when there is a vaccine in the offing.

[absolutezero]

I think there might just possibly be another reason

Possibly.
Results announcements aside, never try to explain why the market does what it does.
It defies logic and most movements are random.

Not when there is a vaccine in the offing.

Yeah. Good luck with that.

[monabri]

Possibly.
Results announcements aside, never try to explain why the market does what it does.
It defies logic and most movements are random.

Not when there is a vaccine in the offing.

Yeah. Good luck with that.

A somewhat strange comment....are you saying that the vaccine won't be effective or even generally available?

In this case, and IMHO, the market response to the Pfizer announcement seems completely logical.

[absolutezero]

Not when there is a vaccine in the offing.

Yeah. Good luck with that.

A somewhat strange comment....are you saying that the vaccine won't be effective or even generally available?

In this case, and IMHO, the market response to the Pfizer announcement seems completely logical.

I'm saying good luck with that.

[idpickering]

Trading Statement

We entered 2020 with a healthy sales rate underpinned by strong demand for our homes and with a focus on driving margin performance. Our operations were inevitably significantly impacted by the shutdown period in the second quarter of 2020, when we acted quickly to put in place the safety measures necessary to operate in a COVID-secure manner. However, the UK housing market has remained resilient and our production and sales have recovered strongly since the shutdown. We expect to report full year 2020 results in line with market expectations1.

Total UK home completions (including joint ventures) decreased by c.39% to 9,609 in 2020, due primarily to the impact on production capacity during the second quarter shutdown (2019: 15,719), and we delivered 1,904 affordable homes (2019: 3,548), including joint ventures, equating to 20% of total completions (2019: 23%). Our net private reservation rate for 2020 was 0.76 homes per outlet per week (2019: 0.96). Cancellation rates for the full year were above normal levels at 20% (2019: 15%), but normalised in the final quarter, at 16%, (2019: 16%). Average selling prices on private completions increased by 6% to £323k (2019: £305k), with the overall average selling price increasing to £288k (2019: £269k), driven mostly by change in mix.

And later on dividends;

As previously stated, we expect to recommence ordinary dividend payments in 2021, starting with the payment of the 2020 final dividend . We will review the special dividend in 2021 for payment in 2022.

https://www.investegate.co.uk/taylor-wi ... 00066215L/