Housebuilders may not be everyone's flavour of the month, but Bellway (BWY) provided compelling evidence that business at the ground level remains robust. In the year to July, the housebuilder notched up its seventh successive year of volume growth, boosting operating profit by more than a third and lifting margins from 20.4 per cent to 22 per cent. Shareholders were rewarded with a 40 per cent hike in the dividend payout. And maintaining a disciplined approach to new investments raised the return on capital employed from 23.9 per cent to 28.2 per cent.
Housing completions rose 13 per cent to a record 8,721, while the average sale price rose by the same proportion to £252,793. The business throws off a lot of cash, so that even after spending a record £670m replenishing the land bank, net cash generation jumped from £98.1m to £249.4m, and the previous year's £38.5m net debt was turned into a net cash position of £26.5m. Profits included a £17.3m gain from the disposal of its joint-venture holding at Barking Riverside, a long-term and capital-intensive project. The move frees up capital, while Bellway retains an option to purchase 2,600 plots.
Crucially, the referendum vote has had little effect. Reservations in the nine weeks from 1 August were up 9 per cent from a year earlier, while at the start of October the forward order book was up from 4,432 homes a year earlier to 4,701 with a value of £1.16bn. Cancellation rates remained low at 11 per cent, while nearly a third of all reservations were made using the Help to Buy scheme. A new division was opened in Coventry and, after the year-end, another in County Durham. The land bank has also been topped up with a further 9,555 plots, and the consented land bank grew by 16 per cent to 24,879.
Analysts at Numis are forecasting adjusted pre-tax profit for the year ending July 2017 of £515m and EPS of 341p (from £481m and 314p in FY2016).
| BELLWAY (BWY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,363p | MARKET VALUE: | £2.9bn | |
| TOUCH: | 2,362-2,363p | 12-MONTH HIGH: | 2,881p | LOW: 1,622p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 1,522p | NET CASH: | £26.5m | |
| Year to 31 Jul | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 1.00 | 105 | 66 | 20 |
| 2013 | 1.11 | 141 | 89 | 30 |
| 2014 | 1.49 | 246 | 157 | 52 |
| 2015 | 1.77 | 354 | 232 | 77 |
| 2016 | 2.24 | 498 | 329 | 108 |
| % change | +27 | +41 | +42 | +40 |
Ex-div: 1 Dec Payment: 11 Jan | ||||
