Taylor Wimpey has a solid start to 2024 despite affordability drag
Taylor Wimpey released a reasonably upbeat trading statement on Tuesday, signalling a stabilisation in sales rates after a dismal 2023.
The UK housing market has been hit by rising mortgage rates amid the cost-of-living crisis, and housebuilders, including Taylor Wimpey, reported sharp declines in sales rates and order books in 2023.
Although shares are well off the lows, Taylor Wimpey is still a considerable distance below the highs recorded in pre-pandemic. For shares to build a base for a recovery, investors will want to see a slowdown in the deterioration of sales activity. Taylor Wimpey delivered this on Tuesday with sales rates at 0.73 per outlet since the start of 2024 compared to 0.75 in the same period last year.
The order is down but remains at a healthy £2,090 million.
Aarin Chiekrie, equity analyst Hargreaves Lansdown, provided an overview of what investors should keep an eye on at Taylor Wimpey, as well as the wider housebuilding sector.
“Despite the UK housing market sitting on uncertain ground, Taylor Wimpey’s made a solid start to 2024 with the Spring selling season progressing as expected. Affordability pressures remain a key issue to wrestle with, but the group called out good mortgage availability and sustained consumer confidence as tailwinds supporting firm levels of buyer interest. Tough trading conditions in 2023 saw revenue and profits fall significantly,” said Aarin Chiekrie.
“But this rebase lower makes for easier comparative numbers moving forward, and Taylor’s trading early in the new year has shown some positive signs. A combination of real house price declines and lower mortgage rates have eased affordability pressure a little, resulting in a marginal uplift in sales rates in the year to 21 April. The order book remains in good shape too, with £2.1bn worth of bookings giving Taylor Wimpy plenty of revenue visibility.”
“However, despite the trends of a modestly improving market, buyers are likely to remain sensitive to price going forward, so it was unsurprising to see management remain cautious and hold full-year guidance firm in today’s update. Full-year performance will be second-half weighted as improved pricing and lower build cost inflation feed through and improve profitability. All in, Taylor Wimpey looks to be one of the better-placed UK housebuilders, and the current valuation could be an attractive entry point for investors willing to ride out near-term uncertainty in the housing market.”
FTSE 100 continues rally as geopolitical concerns ease, earnings eyed
Enthusiasm for UK stocks continued Tuesday as London’s leading index extended its record-breaking streak into a second day.
Easing geopolitical tensions is helping find buyers for cyclical sectors as investor concerns about higher oil prices and their impact on inflation subside.
“The FTSE 100 has spring in its step at the start of the week, amid an easing of geopolitical tensions. The pulse of positivity comes in the absence of fresh retaliatory attacks by Israel or Iran and the US flexing its funding muscle and passing a crucial aid package for Ukraine,” explained Hargreaves Lansdown’s Susannah Streeter
Higher oil prices were the main protagonist in a global equity sell-off last week, and its retreat will combat fears about the timing and frequency of interest cuts.
After setting a new record high of 8,023 yesterday, the FTSE 100 was trading 0.5% higher at 8,063 at the time of writing.
Corporate earnings
Investors will be looking forward to a busy week for corporate earnings. Lloyds will kick off FTSE 100 banking updates in the UK, while many of the US ‘magnificent 7’ technology shares will report this week.
“The focus is switching to earnings season kicking off, and tech giants have a lot to prove as concerns grow about the era of high interest rates continuing. With the S&P 500 dipping below the psychologically important 5,000 mark, some negative sentiment continues to bubble,” Streeter said.
Tesla is first up this evening, although the EV maker has done nothing to justify the ‘magnificent’ label in 2024.
AB Foods was the standout FTSE 100 performer after the Primark owner said group profits jumped 39% on strength in the retail outlet and the food business. AB Food shares were 9% higher at the time of writing.
“After a strong trading update in January, Primark-owner Associated British Foods has built on this momentum with its first-half results,” says Russ Mould, investment director at AJ Bell.
“It delivered an impressive set of numbers with strength across all areas of the business, including the less-heralded food and ingredients arm. The performance of Primark was particularly stunning, suggesting its value offering in clothing is resonating with cost-conscious consumers.”
Taylor Wimpey was among the best performers after releasing a trading statement highlighting steady performance in the first months of 2024. Sales rates and the order book were pretty much in line with last year, representing a stabilisation in activity.
“Despite the UK housing market sitting on uncertain ground, Taylor Wimpey’s made a solid start to 2024 with the Spring selling season progressing as expected,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“Affordability pressures remain a key issue to wrestle with, but the group called out good mortgage availability and sustained consumer confidence as tailwinds supporting firm levels of buyer interest. Tough trading conditions in 2023 saw revenue and profits fall significantly.”
AIM movers: Bushveld Minerals concerned by Vanadium price and Sareum ends loan facility
Cancer treatments developer Sareum (LON: SAR) no longer has an outstanding facility with RiverFort Global Opportunities PCC following the issue of 2.26 million shares. No more withdrawals will be made. That has pleased investors and the share price jumped 24.7% to 29p and it is 75.8% higher over five days.
A year-end trading statement from identity services provider GB Group (LON: GBG) indicates that 2023-24 results will be better than expected with revenues of £277.3m and operating profit slightly ahead of previous expectations of £60m at £61.2m. Net debt was reduced to £81m. Fourth quarter constant currency growth accelerated to 5% and growth is set to continue in mid-single digits. The share price recovered 15.8% to 299.6p.
Trellus Health (LON: TRLS), which develops programmes for managing chronic conditions, still had net cash of $12.2m at the end of 2023 and this should last into the middle of 2025. Revenues were modest at £19,000, but a large-scale pilot was signed with United Healthcare earlier this year and patients are being enrolled. This and other contracts will initially generate modest revenues, but they are important in proving the effectiveness of the company’s technology. The share price improved 12.5% to 0.0405p.
Angola-focused oil and gas explorer and producer Corcel (LON: CRCL) says investor Richard Jennings has sold his 99 million shares to Extractions Premium and Mining taking its stake to 21.3%. It is also buying 100 million shares in the recent placing, which will take the stake to 29.6%. The share price rose 10.8% to 0.36p.
FALLERS
Bushveld Minerals (LON: BMN) shares have fallen 48.9% to 0.0575p on the back of concerns about the vanadium price. Vametco achieved production of 855mt of vanadium in the first quarter of 2024 even though there were 25 maintenance days. The lower level of production meant that cash costs rose from $25.90/kg to 28.40/kg. In contrast higher production by Vanchem meant that cash costs fell to $25.30/kg in the first quarter, and they were even lower in March. Weak steel demand has hit the Vanadium price and it fell from $31.60/kg to $28.40/kg in the most recent quarter. The focus has been on sales to higher margin markets, such as aerospace and chemicals. Bushveld Minerals has $2.2m in cash. The sale of a 50% stake in Vanchem and 64% of the Mokopane project should generate $25m, but regulatory approvals are not expected until July. Further funding is required.
Video games producer tinyBuild (LON: TBLD) reported a 29% fall in 2023 revenues and a swing from a pre-tax profit of $15.9m into a loss of $64.5m – partly due to asset write downs. There will be $10m of annualised savings this year. Operating cash flow was $10.9m last year. That is before capitalised development spending of $31.9m. Net cash was $2.5m at the end of 2023 and since then $11.4m has been raised at 5p/share. The share price dipped 20.8% to 4.75p.
Alaska-focused oil and gas company 88 Energy (LON: 88E) plans to raise £5.23m at 0.16p/share and the share price has fallen a further 18.8% to 0.1575p. There has been a one-third decline so far this year. There was A$17.5m in the bank at the end of March. The money will be spent on project Phoenix in Alaska, where the Hickory-1 well has been tested successfully, and other projects. The cash should last for at least 12 months.
MBU Capital is requisitioning a general meeting at metallurgical coal miner Bens Creek (LON: BEN). It holds 22.1% of the company and wants the general meeting to discuss operational and strategic challenges. The Chapter 11 process continues to be progressed by the US subsidiaries of Bens Creek. The share price declined 16.7% to 0.25p.
Translation services provider RWS Holdings (LON: RWS) says interim revenues were 4% lower at £350m, while pre-tax profit will slide from £54m to £45m. Revenues are expected to improve in the second half, but it will be difficult to achieve the full year pre-tax profit forecast of £120m. The share price is 11% lower at 165.4p.
AB Foods shares soar as Primark gathers momentum, dividend hiked
Primark owner AB Foods shares soared on Tuesday as the company announced growing profits across the board with notable improvements in the food business.
While investors will be happy to see strength in the food business, Primark is always the main event for AB Foods and a 7.5% increase in sales fired up the bulls on Tuesday.
“After a strong trading update in January, Primark-owner Associated British Foods has built on this momentum with its first-half results,” said Russ Mould, investment director at AJ Bell.
The group was top of the FTSE 100 leaderboard, gaining 9% after posting a 39% increase in first-half profits.
Primark continued its recovery from the pandemic as new initiatives such as click-and-collect helped bolster sales and increased store space. Primark’s budget range was been particularly well received during the cost of living crisis and like-for-like sales rose 2.1%.
“This is another very strong earnings report from Associated British Foods. The British multinational food processing and retailing company reported a 39% jump in first half profit and expects to deliver significant growth in all of their operating sectors,” said Mark Crouch, analyst at investment platform eToro.
“ABF’s jewel in the crown Primark, delivered strong sales revenues and improved margins. Disruption that had hindered supply chains earlier in the year seems to have subsided and the business has pushed ahead with their store expansion programme and increased roll out of click & collect service.
“Grocery, ingredients, sugar and agriculture arms all enjoyed increased profitability and as a result, shareholders have been rewarded with an interim dividend increase of 46%.
AB Foods’ hiked the interim dividend to 20.7p.
How Profitable Can Forex Trading Be?
Forex trading is extremely popular – it’s a great opportunity for those wanting to generate profit. Today, we explore a common query among traders: How profitable can Forex trading truly be?
Gaining an Understanding of Forex
Forex, short for foreign exchange, revolves around the trading of currencies. Its appeal lies in its accessibility and potential for significant returns.
Yet, the path to profitability is not without its challenges. With the fluctuating pips in exchange rates, geopolitical events, and market volatility all contribute to the dynamic nature of forex trading.
It is, therefore, imperative for aspiring you to approach this market with caution, armed with a deep understanding of its variations. By staying informed and equipped with the right knowledge, you can navigate the complexities of forex trading with confidence and increase your chances of success in this dynamic arena.
This is why you, as a potential trader should approach this market with caution and be knowledgeable about the facts of the market.
A reputation for delivering results speaks volumes. This gives potential insight into how you can navigate the markets with confidence and unlock lucrative opportunities.
Challenges are opportunities in the trading world. With a suite of tools and resources, you are empowered to make informed decisions and hold profitable moments in the market. From extensive educational materials to trading technology.
Revealing the Profit Potential
The foundation of profitability in forex trading lies in understanding market dynamics and executing effective strategies. While there are no guarantees in trading, diligent research, risk management, and discipline can tilt the odds in favor of success.
Advanced charting tools provide insights into market trends, while customizable trading algorithms enable precise execution of trading strategies. Also, transparency ensures that you have access to real-time market data and analysis, empowering you to make informed decisions.
Gaining personalized support from seasoned professionals allows you to navigate the intricacies of the market with confidence. Whether you are a beginner trader or an experienced one, receiving the right support and guidance needed to maximize profitability can help immensely.
Looking at the Risk in Forex Trading
While the potential for profit in forex trading is enticing, it is essential to acknowledge the inherent risks involved. Market volatility, leverage, and geopolitical events can all impact trading outcomes. However, with proper risk management strategies in place, these risks can be mitigated.
Risk management is a top priority. Full risk assessment tools and customizable risk parameters empower you to protect your capital while maximizing profit potential.
Ensuring robust risk management practices is essential. They prioritize evaluating the traders who not only exhibit exceptional trading skills but also demonstrate disciplined risk management strategies. This rigorous evaluation process underscores your commitment to protecting your capital while maximizing profit potential.
By emphasizing the importance of risk management, it cultivates an environment where you can trade with confidence, knowing your investments are safeguarded. This approach fosters a culture of responsible trading, promoting sustainable success and stability within the trading community.
The Road to Success With Forex Trading
Success in forex trading is not defined by overnight riches but by a commitment to continuous learning and improvement. Profitability is the result of hard work in this domain, along with discipline and perseverance.
As you embark on your journey towards profitability, remember that success is not measured by the size of your gains but by the consistency of your results.
With the right platform by your side, you will have the tools, support, and guidance needed to navigate the ever-changing landscape of forex trading and unlock your full potential.
Forex Trading
In conclusion, the profitability of Forex trading is limited only by your dedication, knowledge, and willingness to adapt. It is undeniably enticing, especially when approached with caution and a solid understanding of risk management.
As your partner in trading, you’ll have access to a wealth of resources and support to help you achieve your financial goals with a platform such as FXIFY, offering the tools, resources, and support needed to navigate the complexities of the market effectively.
With the correct risk assessment and personalized guidance, FXIFY empowers you to take profitable opportunities while safeguarding your investments. Through developing a culture of responsible trading, not only does FXIFY boost your profit potential but also promotes lasting success and stability within its community.
As a potential trader looking to pursue financial independence, you could be a good place to look for the right forex trading platform that serves as a reliable ally and one that guides you to unlock your full potential in the forex market.
Body Rocket’s AI-driven Innovation Disrupting the $2.1B Cycling Market
Sponsored by Body Rocket
As the sporting world continually seeks innovations that push the boundaries of speed and efficiency, a new player, Body Rocket, has emerged with a game-changing technology that promises to revolutionise how cyclists interact with aerodynamics. This promising startup has recently launched a crowdfunding campaign on Crowdcube, aiming to bring their ground-breaking aerodynamic technology directly to the consumer market. You can see the campaign here.
Aerodynamics has been the focus of improvements in the industry for more than a decade, at one point inspiring Specialized Bicycles to adopt the strapline Aerodynamics is Everything. Throughout that time, the biggest factor in a cyclist’s aerodynamics, the rider’s own body, has remained unaddressed. Founded by an engineer and former Paralympian, Body Rocket has positioned itself uniquely to address this gap in the market. By integrating the complex dynamics of wind tunnels directly into the bicycle, Body Rocket’s system offers real-time, actionable aerodynamic insights through a user-friendly, AI-driven interface. This innovation addresses the challenge in a way that’s both groundbreaking for elite athletes, and accessible enough for consumers, offering everyday cyclists access to high-level performance analytics that were once only available to the elites through expensive and time-consuming wind tunnel testing.
Body Rocket is tapping into a segment of the market that sees enthusiasts spending upwards of $12.9 billion on high-performance bicycles and accessories. The market for aerodynamic enhancements alone is valued at $2.1 billion, a niche that Body Rocket is set to capture and expand. Given the projected annual growth rate of 7% for the market, the company is well-positioned to exploit their technological advantage, translating data into speed for the world’s millions of cycling enthusiasts.
Body Rocket’s business strategy revolves around three core offerings: proprietary hardware that can be easily integrated into any bicycle, licensing agreements that leverage their patented technology, and a SaaS model that provides ongoing analysis and insights. This comprehensive approach not only ensures a steady revenue stream but also fosters continuous engagement with the technology, enhancing user experience and performance.
The enthusiasm for Body Rocket’s offerings is palpable. The company has successfully conducted industrial trials with notable industry leaders BMC, Ekoi, Surpas, and recently announced Silverstone Sports Engineering Hub as their first retail partner. Last year their beta testing program was quickly oversubscribed, confirming the market’s interest and the product’s potential to meet cyclist’s needs.
The effectiveness of Body Rocket’s system is championed by its users, notably elite athletes who have incorporated the technology into their training regimes. Kristian Blummenfelt, the Olympic triathlon champion, praised the system’s seamless integration and impactful insights, stating, “Body Rocket has not only enhanced my training but has fundamentally altered how I approach aerodynamics.” Similarly, coach Olav Alexander Bu echoed these sentiments, saying “I spent the last Olympic cycle looking for on-road aero solutions. Body Rocket is the only system that will work”.
With its Crowdcube campaign, Body Rocket is not just seeking financial investments; they are inviting cycling enthusiasts and tech investors to be part of a revolutionary journey. The funds raised will finalise product development, allowing the commercial launch of their first product in fall, and leverage the upcoming Olympic spotlight, where the world class athletes who are using their technology will be in the world’s spotlight. This is a unique opportunity to invest in a technology that bridges the gap between elite sports innovations and consumer accessibility.
As Body Rocket gears up for an exciting phase of growth and development, the cycling world watches with anticipation, ready to embrace an innovation that promises to redefine the limits of what cyclists can achieve. Join the movement and be part of a future where every pedal stroke is empowered by precision-engineered aerodynamics.
Warpaint – The Foundation Has Been Applied And Is Now Ready To Glow
Tomorrow morning will see the announcement of the 2023 Final Results for Warpaint London (LON:W7L) – they will show a significant advance in both sales and profits for that year.
Yesterday the group’s shares leapt over 4% to trade 18p higher to close at 465p, after touching 474p at one stage.
Although already rated on some 26 times estimated 2023 earnings, the shares would see many professional investors shying away – especially after the stock has risen from 365p on Friday 5th April – too far, too fast, perhaps.
Inevitably they will ease back to trade again within the 350p to 425p price range.
And that is when more risk tolerant and patient investors should be taking their positions in this group’s growth equity.
The Business
Founded in 1992, the Iver-based business provides colour cosmetics.
It operates through two segments, Branded and Close-Out.
The £363m capitalised company offers its cosmetic skincare products under the W7, Technic, Man’stuff, Body Collection, Very Vegan, and Chit Chat brand names.
It also provides supply chain management services.
The company sells its products to retailers, distributors, supermarkets, and retail chains, as well as through online channels.
The business operates in the UK, the rest of Europe, Spain, Denmark, the USA, Australia, New Zealand, and internationally.
The Main Brands
W7, which represents 55% of revenue, is a design-focused cosmetic brand with a focus on the 16-34 age range, delivering high-quality cosmetics at affordable prices.
It is sold in the UK primarily to major retailers such as Tesco and Boots, and internationally to local distributors or retail chains such as Normal (DK) and Five Below (US).
W7 is also available online via its own website, Amazon (US), Tmall and Xiaohongshu (China).
The Technic brand, which represents 36% of revenue, is sold in the UK and continental Europe with a significant focus on the gifting market, principally for high street retailers and supermarkets.
In addition, Warpaint supplies own-brand white-label cosmetics produced for several major high street retailers, which represents around 4% of the group’s revenues.
It also sells cosmetics using its other brand names of Man’stuff, Body Collection, and Chit Chat, each targeting a different demographic.
The group is geographically diverse, with its home market representing 43% of revenue, continental Europe 44%, the US 8% and its products that are sold in a further 43 markets represent some 5% of revenue.
Recent Trading Update
Two weeks ago, the group issued an Update on its trading in the year to end December 2023, together with a Q1 report.
Following continued strong trading in the final quarter of last year, sales and profit before tax for 2023 had exceeded previous expectations.
It reported that the strong trading had continued in Q1 2024, with sales showing a record first quarter at £23.5m, some 28% ahead, with margins continuing to be robust and ahead of those achieved in 2023.
Analyst View
At Shore Capital Markets their analysts, Darren Shirley and Clive Black, are looking forward to the group publishing its 2023 results on Wednesday, upon which they will present a ‘comprehensive review’ of their forecasts.
Their estimates for the year to end December 2023 were for revenues of £89.5m (£64.0m), with adjusted pre-tax profits leaping ahead to £18.0m (£10.0m), taking earnings up to 18.0p (11.2p) and increasing its dividend to 11.5p (7.1p) per share.
Ahead of the results the analysts are going for sales rising to £95.0m this year and then £104.0m next year, lifting profits to £19.1m then £21.0m, with earnings of 18.6p then 20.5p and dividends of 11.6p then 12.8p per share respectively.
If that occurs, then the group will have shown a strong progression over those five years.
My View
Despite its very high price-to earnings ratio, I am impressed that the group has no debt and boasts around £7.5m of cash in its balance sheet.
Sensibly it outsources its manufacturing requirement to ensure competitive pricing, rapid production and thereby creating ‘an asset-light structure.’
That enables it to remain focused on its gross margin, its cash generation and maintaining its impressive balance sheet.
If you are a patient investor in Warpaint, buying upon any dips in the price, then I believe that you will be onto a winner.
FTSE 100 on track for record closing high, Ocado jumps
The FTSE 100 surged higher on Monday in a strong rally, which took the index above the record closing high of 8,015.
London’s leading index has traded above this intraday recently but hasn’t yet closed above the record high set in February 2023. Traders will watch closely to see if Monday’s cyclical-led rally can hold and ensure the FTSE 100 joins other major indices that have broken to new highs in 2024.
The FTSE 100’s defensive nature is well documented, and its weighting towards commodities such as oil and banks helped the index outperform over the past week as US and European stocks have suffered amid rising geopolitical risks.
This built a base for the index to launch an attack at all-time highs on Monday as tensions eased and more cyclical names rebounded in a broad rally.
“The FTSE 100 bounced back strongly on Monday amid relief that tensions in the Middle East seem to have been contained for now,” says AJ Bell investment director Russ Mould.
“Travel and retail stocks were among the gainers on the FTSE 100, with precious metals miner Fresnillo the only stock showing notable weakness, with gold and silver prices dipping as demand for safe havens eased.”
Fresnillo was one of only a few decliners on Monday as the FTSE 100 traded at 8,028, up 1.6% on the day.
Housebuilders
Housebuilders were among the best performers after Rightmove said UK house prices jumped and average prices were again within touching distance of record highs.
Persimmon rose 2.7% and Taylor Wimpey built 1.2%.
Rightmove explained that higher-valued properties led the charge as many still struggled with affordability.
“The top-of-the-ladder sector continues to drive pricing activity at the start of the year, with movers in this sector typically less sensitive to higher mortgage rates, and more equity rich, contributing to their ability to move. While some buyers, across all sectors, will feel that their affordability has improved compared to last year due to wage growth and stable house prices, others will be more impacted by cost-of-living challenges and stickier than expected high mortgage rates,” said Tim Bannister Rightmove’s Director of Property Science
“Despite these factors, it has been a positive start to the year in comparison to the more muted start to 2023. However, agents report that the market remains very price-sensitive, and despite the current optimism, these are not the conditions to support substantial price growth. Sellers who are keen to secure their sale will still need to price realistically for their local market and avoid being overambitious at the start of marketing to give themselves the best chance of finding a buyer.”
Ocado
Ocado was the top riser at the time of writing amid reports shareholders are pushing for the company to switch its listing to the US. Ocado shares were 4% to the good after suggestions the premium grocery delivery and food distribution technology could leave London for the US to seek a better valuation.
Ocado would be the latest in a long line of companies either moving or signalling a potential to move to the US as UK stocks trade at discounts to peers over the pond.
“Ocado is the latest name to be banded around as a potential defector from the UK stock market. Weekend reports suggest certain shareholders want it to switch listing venue to the US, a move that others have made to achieve a higher valuation,” Russ Mould said.
“While Ocado is best known to the UK public for its grocery delivery service, the company’s future lies in the provision of technology and robotic systems to power grocery warehouses. It has a partnership in the US with Kroger, one of America’s largest grocery retailers, and that association could help it appeal to investors in the country.
“Ocado would no doubt dearly love to be seen as a tech company, as that would not only help its aspirations to be a much bigger player in the grocery services industry, but also to get investors to ascribe a different and potentially higher earnings multiple to its stock.”
Tyman recommends Quanex bid
Building products supplier Tyman (LON: TYMN) has agreed a bid from Quanex Building Products Corp of 240p in cash and 0.05715 of a share for each Tyman share, which is equivalent to 160p/share. That values the former AIM company at £788m. The shares jumped 30.6% to 386.5p.
There is also an all-share alternative of 0.14288 of a Quanex share for each Tyman share. Quanex already owns 16% of Tyman. The management team of Tyman is being retained.
Tyman shareholders will still receive the 9.5p/share final dividend for 2024. Tyman’s net debt was forecast to be £150m at the end of 2024, but likely cash generation is expected to reduce this to £130m by the end of 2025.
The product ranges are a good fit, and the group will be particularly strong in North America. Quanex will be able to use Tyman’s international presence to sell its products. There could be annual cost savings of $30m.
Tyman was expected to make a 2024 pre-tax profit of £78.4m. The bid equates to just over 13 times forecast 2024 earnings and that could fall to less than 12 in 2025. This does not make the bid appear particularly generous and Quanex says that it will be a significantly earnings enhancing deal in the first full financial year after the savings.
The Tyman share price reached 507p in June 2021. Underlying pre-tax profit peaked at £85.8m in 2022. The markets are tough, but there is continued recovery potential for Tyman.