FTSE 250 movers: Housebuilders in focus as UK govt plans to relax pollution rules
In equity markets, housebuilders were on the rise following reports that Housing Secretary Michael Gove was planning a major change to rules on waterway pollution in a bid to build thousands more homes in England.
The so-called "nutrient neutrality" rules, which aim to limit nutrient pollution, will now be relaxed in an amendment to the forthcoming levelling up bill, will allow 100,000 new homes to be built over the next few years to 2030.
Crest Nicholson and Vistry shares surged on the controversial news. The rules were introduced in 2017 when the UK was still an EU member, are designed to ensure developments do not leak nutrients into local wetlands and waterways in protected areas, affecting 62 local authorities.
They oblige developers to show they will prevent or offset that pollution in order to win planning permission.
Crest Nicholson also got an extra boost - after a profit warning last week which tanked the stock price - with broker Berenberg lifting sentiment after reiterating its 'buy' rating.
The broker pointed out that the stock is trading at just 12x trough EPS, and 0.5x tangible net asset value.
"This leaves the group, even on significantly downgraded forecasts, as the most lowly rated housebuilder in the peer group, and we think this asset-backed valuation is very compelling," said analyst Harry Goad.
"It is on account of this valuation support that we keep our 'buy' rating."
In an unscheduled trading update on 21 August, Crest Nicholson said it had seen a marked deterioration in sales rates over the past seven weeks, with 0.25 houses sold per site per week, down from 0.5 a year earlier.
Profit before tax is now expected to come in at £50m for the financial year ending 31 October, a 30% cut on previous guidance and down from £138m the previous year.
The downgrade to forecasts means Berenberg has cut its target price from 310p to 250p.
"While we acknowledge the company’s comment that higher mortgage rates have affected customer demand, we are nevertheless surprised by the extent of the change in outlook and guidance, which stands out as more marked than peers," Goad said.
"With hindsight it appears the management assumptions for what it could achieve in its H2 were far too optimistic."
Market Movers
FTSE 250 (MCX) 18,404.41 1.51%
FTSE 250 - Risers
Quilter (QLT) 87.80p 7.40%
Crest Nicholson Holdings (CRST) 181.60p 6.82%
Synthomer (SYNT) 67.65p 6.45%
CMC Markets (CMCX) 116.40p 5.63%
Bridgepoint Group (Reg S) (BPT) 177.00p 5.23%
Wizz Air Holdings (WIZZ) 2,266.00p 5.00%
Vistry Group (VTY) 760.00p 4.83%
Aston Martin Lagonda Global Holdings (AML) 354.00p 4.73%
Mobico Group (MCG) 78.95p 4.71%
Dr. Martens (DOCS) 160.40p 4.50%
FTSE 250 - Fallers
Caledonia Investments (CLDN) 3,315.00p -2.21%
Energean (ENOG) 1,100.00p -1.87%
North Atlantic Smaller Companies Inv Trust (NAS) 3,500.00p -1.69%
Hammerson (HMSO) 24.12p -1.07%
Chemring Group (CHG) 286.50p -1.04%
British Land Company (BLND) 311.30p -0.83%
Drax Group (DRX) 555.20p -0.79%
Barr (A.G.) (BAG) 485.00p -0.72%
Bakkavor Group (BAKK) 96.40p -0.62%
Apax Global Alpha Limited (APAX) 166.40p -0.60%