Housebuilder Bellway ticked all the right boxes during its first half. Average sales rose, profits and margins grew, the dividend was hiked dramatically and the forward order book is higher. No surprise, then, that we still like the shares.
The group is benefiting from a greater use of cheaper land which, together with an 8.5 per cent rise in average sales prices to £182,753, helped boost operating margin by 320 basis points to 10.1 per cent. Total completions rose from 2,332 to 2,455, as well – representing 94 per cent of the group's full-year target – while the forward order book rose 4 per cent year-on-year to £498.5m. Completions were particularly strong in the south of the country – up 11.9 per cent to 1,282, while sales in the north were steady at 1,173. Reservation levels rose from 80 to 89 per week, and have accelerated sharply since the half-year ended to 120. The group also generated decent cash flow, some of which was used to fund £105m of land purchases – net debt remained negligible, too, and there's still a £300m bank facility to draw upon.
Numis Securities expects full-year pre-tax profit of £89.5m, giving EPS of 54.7p (from £67.2m and 41.4p in 2011).
| BELLWAY (BWY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 871p | MARKET VALUE: | £1.1bn | |
| TOUCH: | 870-873p | 12-MONTH HIGH: | 860p | LOW: 532p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 899p | NET DEBT: | 3%* | |
| Half-year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 408 | 24.0 | 15.3 | 3.7 |
| 2012 | 459 | 40.6 | 25.2 | 6.0 |
| % change | +13 | +69 | +65 | +62 |
Ex-div: 23 May Payment: 2 Jul *Excludes £34.2m of other financial assets | ||||
