- Strong start to the new year as housing activity remains heightened
- New capital allocation target of £500m
Renewed confidence among housebuilders and securing new construction projects led Henry Boot (BOOT) to report activity levels ahead of expectations since the start of the year.
The land promotion business entered 2021 with 1,744 plots unconditionally exchanged for 2021/22 completion, compared with 1,268 plots in 2019.Housebuilders have returned more fully to the land buying market, said chief executive Tim Roberts. “It feels as though there’s good levels of mortgage availability and as long as interest rates remain low...the housing market will remain buoyant,” he said.
Management plans to boost capital employed in the market to £500m, from £365m at present, which includes growing annual land promotion sales volumes by almost three-quarters to 3,500 plots a year and doubling the size of the property investment portfolio to around £150m. It believes it can generate an annual return on capital of between 10 and 15 per cent.
Numis upgraded its 2021 EPS forecast by 11 per cent to 15.1p, which leaves the shares trading at a fairly-valued 19 times forward earnings. Hold.
Last IC view: Hold, 270p, 24 Aug 2020
| HENRY BOOT (BOOT) | ||||
| ORD PRICE: | 286p | MARKET VALUE: | £ 381m | |
| TOUCH: | 285-287p | 12-MONTH HIGH: | 290p | LOW: 180p |
| DIVIDEND YIELD: | 1.9% | TRADING PROP: | nil | |
| PREMIUM TO NAV: | 22% | |||
| INVESTMENT PROP: | £88.5m | NET CASH: | £27m | |
| Year to 31 Dec | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 177 | 39.5 | 21.5 | 7.0 |
| 2017 | 203 | 55.4 | 32.1 | 8.0 |
| 2018 | 277 | 48.6 | 28.3 | 9.0 |
| 2019 | 239 | 49.1 | 28.3 | 5.0 |
| 2020 | 235 | 17.1 | 9.0 | 5.5 |
| % change | -2 | -65 | -68 | +10 |
| Ex-div: | 29 Apr | |||
| Payment: | 28 May |
