VTY: Cutting jobs as well as house prices

Research evidence excerpt

VTY: Cutting jobs as well as house prices

Vistry

we believe Vistry justifies a discount due to the current risks and uncertainties surrounding the business model. Our price target

supports our Underperform rating in view of our relative ratings framework.

Risks to rating and price target

Our estimates assume that the UK macroeconomic climate does not weaken from its current situation.

Downside risks

If the UK economy were to move into a prolonged recession and/or if social housing funding was cut significantly there would be

significant risk to our rating and price target. In 2022 the UK housebuilding industry became subject to an additional 4% tax. The

Residential Property Developer Tax is applied on top of the standard level of corporation tax on profits above £25m. Any further

residential developer taxes would have a negative impact.

Any new regulations would be likely to have negative cost implications, in our view.

Upside risks

Vistry's land sales could be larger and sooner than we anticipate leading to a significant increase to our dividend estimates.

The public sector may release more land to Vistry than we anticipate leading to an increase in volumes and therefore profits. If

the UK government announces a significant increase in funding for Registered Providers Vistry may see increased demand from

its partners which could lead to a re-rating of the shares.

There is currently significant uncertainty around the timing of the medium-term targets (cash return, ROCE and EBIT); once this

uncertainty is lifted the price of the shares may lift too.

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