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Harworth valuations rebound on improved housing outlook

The master developer reversed losses suffered during the first half
Harworth valuations rebound on improved housing outlook
  • Land sales made at or above 2019 values
  • Dividend reinstated at 12.75p a share

Improved confidence in the housing market during the second half of last year helped boost the value of Harworth’s (HWG) major residential developments. 

While sales of serviced land were lower in volume, after the group paused activity on some sites in the immediate wake of the pandemic, all were made at or above 2019 pricing. “That helped underpin valuations at the end of the year,” said chief financial officer Kitty Patmore. 

However, it was the continued demand for industrial assets that drove 2.8 per cent growth in the European Public Real Estate (EPRA) net development value, to 160p a share. Annualised rental and royalty income rose almost a third thanks to acquisitions, lettings and lease re-gears. 

Despite the reinstatement of the dividend and increase in the portfolio valuation, house broker Peel Hunt retained its NAV forecast of 167p a share at the end of December to reflect ongoing economic uncertainty. Yet the risk seems to be well accounted for in the shares 25 per cent discount versus that forecast. Buy.

Last IC view: Buy, 90.4p, 6 Oct 2020

HARWORTH (HWG)    
ORD PRICE:125pMARKET VALUE:£ 403m
TOUCH:125-126p12-MONTH HIGH:130pLOW: 84p
DIVIDEND YIELD:1.4%TRADING PROP:£7.6m
DISCOUNT TO NAV:18%  
INVESTMENT PROP:£398m*NET DEBT:15%
Year to 31 DecNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201611543.513.70.753
201712741.815.80.828
201813832.810.60.911
201914430.37.900.30
202015233.48.001.80
% change+6+10+1+500
Ex-div: 06 May   
Payment: 28 May   
*Includes investments in joint ventures