Don't be concerned about the absence of a half-year dividend, because housebuilder Persimmon remains committed to returning £1.9bn to shareholders through dividends between 2013 and 2021. That's about 620p a share, and the first payment of 75p a share is expected next June. Underlying profits rose by 65 per cent to £98.7m in the first half, and anyone acting on our buy recommendation (457p, 29 Sep 2011) is now sitting on a 51 per cent profit. And with a projected annual average yield of over 10 per cent, the shares are still worth buying.
Trading in the first half saw legal completions up by 6 per cent to 4,712 and average selling prices ahead by 7 per cent at £171,206, both of which helped to boost operating margins from 9 per cent to 12.2 per cent. Strong cash flow of £112.9m - up from £55.1m - helped to finance further land purchases, with 5,779 plots acquired on 50 sites. This brought the total of controlled and owned plots to 63,786, or 6.5 years of output at current levels.
And while sales since the half-year end have slowed in the seasonally quieter summer period, the private weekly sales rate is still 5 per cent ahead of last year, while forward sales to date - including legal completions - are up 4 per cent at £1.04bn. Moreover, Persimmon opened 65 new sites in the first half and intends to add a further 60 in the second half.
Commenting on government proposals to cut the number of units that housebuilders have to set aside for social housing, chief executive Mike Farley admitted that this would mean having to attract more private buyers. However, he added that stimulus measures such as FirstBuy have been supportive, and the group's shared equity interest in first-half sales rose from 24 per cent to 30 per cent.
Analysts at Peel Hunt have raised their full-year forecasts by 5 per cent to adjusted pre-tax profits of £192m and EPS of 48p (from £143.7m and 36.5p in 2011)
| PERSIMMON (PSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 688p | MARKET VALUE: | £2.08bn | |
| TOUCH: | 686-688p | 12-MONTH HIGH: | 750p | LOW: 366p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 626p | NET CASH: | £135m | |
| Half-year to 30 Jun | Turnover (£m) | Pretax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 713 | 60.3 | 15.5 | 4.00 |
| 2012 | 807 | 98.3 | 25.4 | nil |
| % change | +13 | +63 | +64 | - |
Ex-div: na Payment: na | ||||
