General elections can be disruptive to the housing sector, but apparently not so for MJ Gleeson (GLE), which builds low-cost homes in the north of England. "There's the housebuilding sector and then there's us," says chief executive Jolyon Harrison. "At our end of the market, it doesn't matter which of the two main political parties gets in: both say they will do great things for first-time buyers."
Part of that confidence can be traced to strong trading in the last six months of 2014, when gross margins in Gleeson's homes division rose to 28.8 per cent - up from 25.9 per cent a year ago. This was achieved despite rising labour costs, which Gleeson has priced into its forecasts and expects to level off this year. The average selling price moved up 3.8 per cent to £124,600.
This should help Gleeson capitalise on a land pipeline that has expanded 30 per cent year on year to include 5,267 plots, with a further 1,900 plots under negotiation. The company's strategic unit, which focuses on greenfield land acquisitions in the south of England, grew operating profit from £0.1m to £0.8m, and should bank further profit from land sales in 2015.
Broker N+1 Singer forecasts full-year adjusted pre-tax profit of £17.5m, rising to £21m in 2016, giving adjusted earnings per share of 25.7p and 31.2p, respectively.
| GLEESON (GLE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 385p | MARKET VALUE: | £207m | |
| TOUCH: | 378-385p | 12-MONTH HIGH: | 433p | LOW: 325p |
| DIVIDEND YIELD: | 2% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 240p | NET CASH: | £7.7m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 34.4 | 3.7 | 7.0 | 1.1 |
| 2014 | 42.6 | 3.9 | 6.2 | 2.7 |
| % change | +24 | +7 | -11 | +145 |
Ex-div: 5 Mar Payment: 2 Apr | ||||
