- Full-year results are expected to come in ahead of consensus expectations
- Targeting the affordable part of the market may insulate the group from help-to-buy restrictions
MJ Gleeson (GLE) expects full-year results to be significantly ahead of consensus forecasts following a sharp bounceback in housing completions and the order book.
Gleeson Homes sold 17 per cent more homes during the second half of 2020 and the average selling price was also up 9 per cent to £140,600. Targeting first-time buyers and the affordable-end of the market means the group will be more insulated from the tapering of the stamp duty break and help-to-buy restrictions this year, argued chief executive James Thomson.
“We don’t sell any homes over £230,000,” Thomson said. “A very very small number of our buyers pay any stamp duty at all.” Less than 5 per cent of customers that used the help-to-buy scheme during the first half would not be eligible under the scheme from April.
Analysts upgraded the consensus earnings forecast for 2021 by 3 per cent to 49.3p a share, which leaves the shares trading at 16 times forward earnings. That is a premium to some larger housebuilders, but we think it is one worth paying given the group’s resistance to potential disruption from the help-to-buy scheme. Buy.
Last IC view: Buy, 606p, 14 Sep 2020
|MJ GLEESON (GLE)|
|ORD PRICE:||769p||MARKET VALUE:||£448m|
|TOUCH:||762-774p||12-MONTH HIGH:||1,005p||LOW: 512p|
|DIVIDEND YIELD:||0.7%||PE RATIO:||45|
|NET ASSET VALUE:||394p||NET CASH:||£32m|
|Half-year to 31 Dec||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|