NZ-based residential land developer Winton Land [ASX:WTN] released an investor presentation earlier this morning, listing key challenges of FY23.
WTN was trading for $1.95 at the time of writing, and so far in 2023, WTN has dropped by 28% in share price — in line with the wider housing market crisis linked to COVID supply chain issues:
Source: Market Index
Winton Land addresses current market volatility and outlook for FY23
Among the key points provided by Winton Land this morning, the group shared that it had updated its guidance for the 12 months ending June 30. It’s now expecting its net profit after tax to reach more towards the lower end of its initial guidance to between $72.4 million–$82.4 million.
The land development group said that this change was driven by delivery delays of pre-sold projects, which were largely linked to the heavy January rainfall experienced in the North Island.
The group also warned that the lowered guidance is also at the mercy of any further possible adverse or unforeseen circumstances that could impact things further.
The environment remains volatile, with strange weather patterns still likely to impact business in the sector, continuing delays of supplies spanning the industry. This is not helped by the possible lingering impacts of COVID-19, even though most restrictions have been lifted worldwide.
Winton acknowledged that the NZ housing market has faced some challenging headwinds over the past 12 months. However, it does predict — based on some ‘strong indications’ — a more positive change in the coming financial year, with the perception that the market has now bottomed out.
Winton said the building industry has been slow to gather momentum, with new consents for dwellings having fallen by 26% in April, 25% in March and 29% in February. Additionally, lower housing supply impacts constraints in the NZ housing market, pushing up housing and rental price increases.
Adding to the pressure is that in April, construction companies had made up around 23% of all insolvencies, which was up from 8% of insolvencies in April 2022.
However, Winton says that rental prices have begun to show signs of improving, and sentiment along with them. Ultimately, this is a key indicator that property price sentiment is also due to boost the building market once more.
The land developer says there are signs of recovery with an increase in the desirability of new builds, partly owing to current interest rate deductibility rules. Furthermore, investors have been reported to be buying another investment property last month.
WTC reports an upward trend in the intent to purchase new builds by investors for the last five months, hoping to capitalise on rising rental prices.
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