Good morning, it's Paul here with the SCVR for Friday.

It's a quiet day for news. Remember that I only cover results & trading updates for some sectors. I'm not going to comment on other stuff, like speculative drug companies jumping on the Covid-19 bandwagon! Because I have no insights on anything like that.

Here is the link to yesterday's report - in case you missed it, I added new sections on Up Global Sourcing Holdings (LON:UPGS) and Cenkos Securities (LON:CNKS) in the afternoon/evening.

Today's report is now finished.

Barratt Developments (LON:BDEV)

Share price: 515.8p (down 0.6% today, at 09:13)
No. shares: 1018.3m
Market cap: £5,252.4m

(I currently hold a long position)

COVID-19 Update

This update from the UK's largest housebuilder is very similar to recent updates from other housebuilders.

Key points;

  • Phased re-opening of sites, from 11 May (not re-opening in Scotland - no reason given)
  • Social distancing marshals on each site will enforce compliance with new procedures
  • Reduced level of customer interest - this seems at odds with other housebuilders, who sounded more upbeat about demand
  • Limited number of additional completions this FY 06/2020
  • 11,776 completions YTD, very similar to LY (11,723)
  • Forward sales of 12,271 houses, £2.85bn
  • Taking same cash conservation measures as others
  • Cash - £430m, plus undrawn £700m RCF, plus Govt CCFF scheme funds if needed - sounds strong, no issues with solvency, as with other housebuilders - the whole sector is vastly more financially secure than in previous recessions
  • Outlook - guidance was withdrawn on 25 March. No update given. This is no good, they should have a very clear idea of the outturn for FY 06/2020, given that few further completions are anticipated.

My opinion - my view remains positive on this sector. With interest rates at historic lows, I don't see any likelihood of house prices falling a lot. Hence with building work resuming, this sector could continue recovering. I imagine the Govt is likely to want to stimulate activity, hence a drop in Stamp Duty seems likely, in my view.

Balance sheets are a joy to behold in this sector, they're amazingly strong. Other sectors could learn from this. Corporate financial strength needs to be increased across the board in Western economies. Hence, as indicated by Shoe Zone (LON:SHOE) for example, dividends may be withheld until companies have strengthened balance sheets,…

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