More on Wimpey
Wimpey: H1 2006 trading statement
Housebuilder Wimpey has issued a positive trading update for the first half of 2006. The company said the housing market in the first half of 2006 had been “stable” in comparison to the weak market last year.
The company entered 2006 with a strong order UK book (up 22% in value) which has resulted in a 25% increase in UK completions (to 5,854) in H1. Margins on UK sales have weakened from the levels seen in 2H 2005.
The US market, the main driver of Wimpey’s earning in the recent past appears to have weakened with completions for the first half reaching 1,968, slightly below the first half of 2005.
The US order book at June 2006 stood at $668m, down 14% by (and 17% lower by volume) than last year.
The company expects that in the UK market, the company’s performance (in H2) will be similar to the second half of last year. The company is non-committal in its expectations for the US market in the second half, saying that it is too difficult to predict.
While the company’s H1 performance seems to have been respectable, it is by no means clear that the cycle in the housing market has turned. The share trades at 445p, on a prospective PE (2007 earnings) of 7x, in line with the sector with a yield of 4.5%.
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