There is plenty going on with the housebuilders this morning to interest investors. Contrasting updates from McCarthy & Stone (MCS) and Telford Homes (TEF:AIM) are accompanied by an end to merger talks between Bovis Homes (BVS) and Galliford Try (GFRD) and the appointment of Galliford’s former chief executive Greg Fitzgerald as Bovis’ new CEO.
In share price terms this adds up to a 2.5% advance for Telford to 369p, a 2% fall for McCarthy to 181.4p, a 2.1% advance to 864p for Bovis and a 0.75% rise to £14.73 for Galliford.
BREXIT BLUES FOR MCCARTHY
Retirement specialist McCarthy & Stone blames Brexit vote related uncertainty for a 42% decline in underlying first half profit. While Shares favourite housebuilder Telford Homes points to record revenue for the year to 31 March, slightly ahead of expectations.
Telford, which focuses on non-prime London locations, also has sufficient visibility to guide for pre-tax profit in excess of £40m for its March 2018 financial year and in excess of £50m for March 2019.
Why the difference? McCarthy is reliant on customers selling their homes in order to buy its purpose-built properties. A wider slowdown in housing transactions around last June’s Brexit vote therefore hit forward orders.
SUNNY SKIES FOR TELFORD
The ongoing imbalance between supply and demand in London is proving very supportive to Telford with more than 80% of anticipated gross profit for March 2018 secured and more than 60% of March 2019.
An increasing bias towards Build to Rent developments – which tended to be funded up front by institutional investors is also reducing pressure on its balance sheet.
THUMBS UP FOR NEW BROOM
Elsewhere, Bovis has rejected Galliford but not its ex-boss and industry veteran Greg Fitzgerald. The positive market reaction to this appointment suggests investors have some faith in Fitzgerald’s ability to turn things around at the troubled company, which has been hit by profit warnings and customer complaints since late 2016.