Vistry shares gained on Thursday after the homebuilder released full-year earnings revealing resilience in its partnerships approach to new homes.

Vistry’s strategy of focusing on affordable housing through partnerships with local authorities and associations delivered 16,118 new homes in 2023, down only 5.4% proforma compared to the prior year.

The company, which operates client-facing Bovis Homes, Linden Homes and Countryside Homes, now delivers the majority of its completed units through partnerships and has enjoyed greater stability than housebuilders focusing on the private market.

The successful integration of Countryside Partnerships has yielded cost synergies as well as greater coverage of the market.

Revenues for the year were 29.6% higher on an adjusted basis to £4.04bn and operating profit rose 8.2%. An enhanced focus on the affordable end of the market will ultimately pressure margins, but the group is now a high-volume operator, and sacrificing margins will be acceptable to shareholders if profits grow.

Vistry shares added 1% on Thursday and are now up 47% over the past year. This compares to a 5.7% gain for Persimmon and 22% rise for Taylor Wimpey. The market clearly sees value in Vistry’s partnership model.

“Vistry’s transition to a partnerships giant has meant its full-year numbers have held up better than many of its peers. Partnerships involve teaming up with local authorities and housing associations to provide affordable housing. These partners foot most of the bill which reduces Vistry’s risk and frees up cash to deploy elsewhere in the business,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“But it comes at a cost – the profits in this kind of work aren’t as juicy. That’s exactly what we’ve seen play out in 2023. Despite underlying revenue climbing around 30%, underlying operating profit only edged around 8% higher as margins came under pressure.

“Vistry will need to ramp up volumes if it wants to offset the impact of lower volumes on overall profits. The mammoth £4.6bn order book gives investors some comfort in this regard, providing near-term revenue visibility as the group looks to increase completions this year, targeting growth of around 8.5% to 17,500 new homes.”

The FTSE 100’s rally continued on Wednesday morning after UK GDP expanded in January, and another strong session in the US helped lift the mood.

It isn’t often the FTSE 100 trades based on underlying UK economic developments, yet a 0.2% increase in UK GDP in January was enough to maintain positive sentiment and take stocks higher.

Early gains diminished and the FTSE 100 was trading flat higher at the time of writing.

“A pick-up in the UK economy and a rally in US tech shares on Wall Street last night helped to sustain the positive momentum on the markets,” said Russ Mould, investment director at AJ Bell.

“In line with the consensus estimate, UK GDP grew by 0.2% in January thanks to expansion in the services sector.

“While the figure is tiny, the fact it is growing at all is a positive. Investors want the UK’s recession status cast into the rear-view mirror so they can focus on how potential looser monetary policy could provide relief to consumers and businesses, and in turn feed into greater economic activity. Sadly, that could take time to play out.”

The risk-on sentiment in FTSE 100 stocks was evident in a cyclical-led rally. Miners were among the best performers, with Glencore and Antofagasta battling it out for the pole position on the leaderboard. The two miners were over 2% higher at the time of writing. Anglo American was up 1%.

Interest also increased in the utilities sector, as National Grid and United Utilities crept 1% and 1.7% higher, respectively.

Fresnillo was the FTSE 100’s biggest faller as gold retreated from record highs. St James’s Place extended declines with another 1.5% loss.

Video games services provider Keywords Studios (LON: KWS) was resilient in 2023 despite the tough video games market. The share recovered 12.7% to 1544.5p, but they are still below the level at the start of 2024. Adjusted pre-tax profit was 2% ahead at €114.7m on revenues 13% higher at €780.4m. Broader media business was hit by the writers’ strike in Hollywood and that knocked €20m off revenues.  

Symphony Environmental Technologies (LON: SYM) has been boosted by a positive report from the US Environmental Protection Agency that pro-oxidant masterbatches “could significantly reduce the persistence of plastic pollution without creating undesired by-products”. This is based on a scientific evaluation and is a positive thing for the company’s d2w technology.

Woodbois (LON: WBI) is selling its Mozambique operations to focus on its timber interests in Gabon. The business will be bought by a local purchaser and the agreement should be signed in the next few weeks. Bans on exports and instability in the Cabo Delgado region mean that Mozambique is less attractive.

FALLERS

Supercapacitors manufacturer Cap-XX (LON: CPX) says its working capital position continues to deteriorate because of the costs of the patent infringement case and disappointing revenues. This has hampered the ability of the company to invest in R&D. Debt is not a potential source of funds and a share issue process has taken longer than expected. Cash is required by the end of the month. The share price slumped 82.1% to 0.0715p.

Blue Star Capital (LON: BLU) says investee company Dynasty Gaming & Media is acquiring the assets of Googly Media for $7.6m. The combined business will be valued at $15m, but that is much lower than expected. Blue Star Capital, which will convert $75,000 of loan notes into shares, previously valued its investment at £5.45m and it is now worth £450,000. The share price dived 44.8% to 0.04p.

Sareum (LON: SAR) issued a trading statement on Tuesday afternoon. The drug developer’s interim loss will be higher. The fall n the share price means that Sareum has not been able to draw down on its RiverFort subsidiary and it needs to raise additional cash. The share price declined a further 27.3% to 20p.

Medical imaging and data analytics services provider Ixico (LON: IXI) says 2023-24 revenues will be lower than expected at between £5.2m-£5.9m. Capital constraints are hitting the spending of biopharma clients. This has led to the postponement of trials. Cavendish expects a full year loss of £2.9m. The share price fell 16.2% to 7.125p.

Balfour Beatty shares were higher on Wednesday after the construction services group released 2023’s full-year results revealing a year of progress in terms of profits and revenue.

Revenue grew 7% to £9.6bn and underlying profit from operations (PFO) rose 2% to £236m. Profit before tax fell due to the impact of disposals.

Balfour Beatty shares were up 9% to 360p at the time of writing.

“Balfour Beatty has built a sturdy reputation with investors in recent years. The international infrastructure firm has consistently produced growing profits and delivered attractive shareholder returns. This morning’s earnings update will further cement that reputation,” said Mark Crouch, analyst at investment platform eToro.

“The business reported a jump in revenue and profits for 2023. Despite a marginal dip in the order book, they expect growth to continue into 2025. More welcome news for shareholders was the increase of the dividend and share buyback program, with the latter being raised to £100m, set to complete by December 2024. All are very good signs.”

Balfour Beatty’s outlook was particularly encouraging. The company said, ‘The Board expects an increase in PFO from its earnings-based businesses in 2024, with growth accelerating in 2025.’ The group sees investment in infrastructure projects supporting earnings in the coming periods as well as positive contributions from disposals.

Shareholders will enjoy a 10% increase in the final dividend to 11.5p.

The FTSE 100 made healthy gains on Tuesday despite US CPI inflation coming in hotter than expected as financial helped propel London’s leading index to the best intraday levels since January.

The FTSE 100 touched highs of 7,764 on Tuesday, a similar level the index had retreated from on several occasions in January. Should the index break above this level, it will attack levels not seen since April 2023.

“The blue-chip UK index was led by a rally in financials including a 3.1% gain from Prudential and a 2% rise from Standard Chartered. Interestingly, nearly all sectors were in positive territory, implying that investors were feeling upbeat across the board which is a healthy situation to have in markets,” said Russ Mould, investment director at AJ Bell.

“Investor sentiment was boosted by slowing UK wage growth which raises the chances of the Bank of England cutting interest rates sooner rather than later.”

The UK unemployment rate has increased to 3.9%, and wage growth slowed to 6.1%. Job vacancies also fell as the recession cooled the UK jobs market. While this isn’t great news for the underlying economy, it is excellent news for traders longing for easier monetary policy.

The FTSE 100 was 1% higher at the time of writing.

US CPI

It was a different story in the US. CPI inflation came in hotter than expected – but not to the extent that it would prevent the Federal Reserve from rates in the summer, and this buoyed equity bulls.

US equities jumped on the open as US CPI rose 0.4% month-on-month and 3.2% in the year to February.

“The recent data series came in slightly above expectations, particularly regarding core inflation. While this doesn’t derail the progress the Fed is making, it highlights the challenge of addressing inflation and getting it back to the 2% target,” said Ryan Brandham, Head of Global Capital Markets, North America at Validus Risk Management.

“US yields have been gradually declining throughout March, but this data might cause them to increase in the coming days as traders debate what it means for potential cuts in the US later this year.”

The merry-go-round of ‘will they, won’t they’ expectations of when the Federal Reserve will cut rates will continue, but, for today at least, the data suggests rate cuts are very much on the table for June/July.

Persimmon

Persimmon was the FTSE 100’s biggest faller, with a 2.2% loss, after the housebuilder said completions would increase only marginally in 2024 compared to 2023. Revenue sank 28%, and operating profits more than halved in 2023.

“Persimmon’s latest set of results will make for tough reading for shareholders after the UK housebuilder reported a 52% drop in profits in 2023, citing build cost inflation and weaker demand hampering performance. Also, the company’s cash position, while still relatively healthy, has fallen considerably,” said Adam Vettese, analyst at investment platform eToro.

“Persimmon shares looked to be mounting a recovery in the last six months, rallying over 40%, and after what has been a torrid few years for the housebuilder, investors would have been eager to see this continue at pace. However, as these results indicate, so much depends on factors outside of Persimmon’s control.”

AIM-quoted pawnbroker H&T (LON: HAT) reported strong growth in profit and further progress is expected this year despite higher wage costs. The pledge book is growing and the acquisition of Marcroft boosts parts of the business with potential for growth.

The AIM-quoted company is benefitting from increasing pawnbroking demand and higher gold prices. The retail side has been tougher, but this is being refocused on lower price points that are more in keeping with customer demand. Pre-owned jewellery margins remain high, but new jewellery margins slumped.

The pawnbroking book grew 28% to £128.9m. Group 2023 revenues were 27% ahead at £220.8m. Retail and other services were the only parts of the business making a lower profit contribution. Pre-tax profit was up from £19m to £26.4m. This enabled a rise in the dividend from 15p/share to 17p/share.

The recent Maxcroft acquisition increases exposure to self-employed and small business pawnbroking loans. The security is the same as for individuals. It also boosts the foreign currency business.

The new £85m debt facility means that H&T has all the cash it requires to expand the business, even after the £11.3m paid for Marcroft. A further 50 stores will be refreshed this year and up to 12 new branches could be opened.

The share price is 10.9% higher at 377p, which means that some of the downgrade-related losses from earlier in the year have been clawed back. The prospective multiple is seven and the forecast yield is 5.3%.