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Vistry shares slip on profit-taking despite upbeat trading statement

Vistry is showing signs of life after the house builder said it expects profits to rise as its partnerships model leads outperformance compared with the rest of the sector.

After recently earning promotion to the FTSE 100, Vistry has hit the ground running releasing an upbeat trading statement highlighting improving demand and an expected 10% increase in adjusted operating profit for the full year.

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Investors will be encouraged by the bullish outlook for completions as the company said it expected to deliver over 18,000 completions during the full year – a sharp jump from last year’s 16,118 completions.

Higher profits and completions guidance were underpinned by rising sales rates which hit 1.21 in the first half of 2024 compared to just 0.86 in the same period last year. 

“It has been a good week for builders following Labour’s election win and bold housing pledges. Vistry Group will look to reap the benefits as demand for affordable homes should see the firm’s profit rise around 7%,” said Adam Vettese, analyst at investment platform eToro.

“This is quite the turnaround from long-term material cost increases due to inflation, as well as a slow rate cutting cycle dampening the market for new home sales. Cost pressures are starting to ease and the first rate cut is likely just around the corner, so if the new government is true to its word it could be a great time to be in the housebuilding sector.”

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Shares were slightly down on Tuesday after the stock embarked on a robust rally in the run-up to last week’s election.

The new Labour government’s approach to housebuilding will be highly supportive of Vistry’s business model and promise favourable outcomes for investors. The election victory was well-telegraphed by the polls, and investors bid the housebuilding sector up in the preceding weeks. However, the sector dipped in the wake of the election in a classic ‘buy the rumour, sell the fact trade’.

“A Labour government could provide a tailwind for Vistry compared to other traditional homebuilders. With promises of 300,000 houses annually, they are expected to release more land and offer taxation support, along with backing on planning, particularly for affordable housing,” said Yanmei Tang, Analyst at Third Bridge.

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