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"Things have changed since our cautious trading statement in July," says Bovis chief executive Malcolm Harris. He adds that reservation rates then were suffering due to the prospect of higher interest rates, but that they may have now peaked.
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The improved outlook was backed up by an increase from 2,273 to 2,282 in the the number of reservations and forward sales in line with expectations, leaving the group confident of increasing full-year house sales. Margins were broadly maintained at 22.5 per cent, and any downward pressure from the introduction of new sales incentives should be offset by increased volume sales. Measures designed to entice buyers include a 1 per cent mortgage subsidy for the first three years and a shared equity scheme where buyers pay 75 per cent of the house price and buy the remainder over a 10-year period.
What's more, Bovis has no exposure to areas of high price inflation, such as London, Scotland and Northern Ireland. Meanwhile, a number of opportunities are being pursued that will boost its land bank during the second half after a first-half fall. Broker Investec expects full-year pre-tax profits of £140.4m and EPS of 82.2p (£135.5m and 79.5p, respectively, in 2006).
Click here for a guide to the terms used in IC results tables
| BOVIS(BVS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 753p | MARKET VALUE: | £908m | |
| TOUCH: | 752-754p | 12-MONTH HIGH: | 1,204p | LOW:720p |
| DIVIDEND YIELD: | 5.0% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 579p | NET CASH: | £108m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 250 | 56.6 | 33.4 | 10.0 |
| 2007 | 260 | 58.4 | 34.2 | 17.5 |
| % change | +4 | +3 | +2 | +75 |
Ex-div: 26 Sep Payment: 23 Nov |
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Trading at nine times forward EPS, Bovis's shares are at a premium to Barratt and Persimmon, although they are supported by a land bank valuation equivalent to 1,300p a share and an attractive yield. Fairly priced.
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
