In the latest trading period, completions rose 3 per cent to 1,202 units, but a greater proportion of these were private sales of traditional family homes, where average prices rose nearly 10 per cent to £224,000. In turn, this helped boost operating margins from 7.5 per cent to 10.2 per cent. Active sales outlets were a little lower at 82, although this was mainly because a higher-than-expected sales rate led to some outlets closing early. In fact, in the past eight weeks, the volume of private reservations have risen 8 per cent to 443 units. The new London development is progressing well, too, with 700 plots acquired with a gross development value of £450m and the region is expected to make a meaningful contribution to profits in the next financial year.
Numis is forecasting full-year pre-tax profits of £55m and EPS of 10.9p (from £43m and 9.8p in 2012), rising to £70m and 13.7p the year after.
|ORD PRICE:||187p||MARKET VALUE:||£692m|
|TOUCH:||186-192p||12-MONTH HIGH:||203p||LOW: 104p|
|DIVIDEND YIELD:||nil||PE RATIO:||17|
|NET ASSET VALUE:||156p||NET DEBT:||11%|
|Half-yearto 31 Dec||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Redrow shares are up around 80 per cent since June and now trade on 17 times forecast earnings, dropping to 13.5 times in 2013-14. They are also priced on a 20 per cent premium to book value, which means the good news is now largely priced in. Hold.
Last IC view: Sit tight, 152p 19 October 2012