Join our community of smart investors

Mar City on the move

Housebuilder Mar City is just beginning to gain traction and sales should start to accelerate in the second half
September 16, 2014

Mar City (MAR) delivered a strong first-half performance, but the second half should be stronger still because the sites acquired in December are due to start generating sales later this year.

IC TIP: Buy

What sets the housebuilder apart from its contemporaries is the employment of modular construction. This is where significant components are assembled in a factory and then delivered on site, thus saving on costs and reducing build times.

It's still relatively early days for Mar City. Most first-half revenue was generated from its former building contractor operation, so the group's transformation is still in progress. Indeed, just 71 housing sales were completed in the half - there were none in the prior period - at an average price of £131,000. An emphasis on affordable housing should boost sales, however, as this is where the government's Help to Buy scheme is more relevant.

Mar added 1,215 plots to the 512 secured last December and, with a new £40m debt facility in place, a land bank of at least 5,000 units should be created by the year-end. The fall in reported earnings per share, meanwhile, is merely a dilution effect: Mar raised funds through two placings to help support land acquisitions.

Broker WH Ireland expects full-year pre-tax profit of £11.6m, giving EPS of 8.3p (from £3.4m and 7p in 2013), rising to 11.3p in 2015.

MAR CITY (MAR)
ORD PRICE:117pMARKET VALUE:£129m
TOUCH:115-119p12-MONTH HIGH:154pLOW: 53p
DIVIDEND YIELD:nilPE RATIO:24
NET ASSET VALUE:62pNET DEBT:7%

Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20138.71.13.5nil
201425.52.61.8nil
% change+193+136-49-

Ex-div: -

Payment: -