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Persimmon still purring

The housebuilder recently appointed a new chief executive after incumbent Jeff Fairburn was ousted over the furore surrounding his pay package
February 26, 2019

Persimmon (PSN) has come in for some criticism recently over its involvement in the government's 'Help to Buy' scheme and its executive share awards. However, the housebuilder put in another robust performance during 2018. The return on average capital employed in the year to December 2018 rose to 52.8 per cent, while average selling prices and completions were ahead slightly.

IC TIP: Hold at 2451p

Annual operating margins grew from 28.2 per cent to 30.8 per cent, hitting 31.8 per cent in the second half of the year. Persimmon’s average selling price remains at the lower end of the housing ladder at £215,563. This is especially relevant because more than half of its customers are first-time buyers, of which nearly half use the 'Help to Buy' scheme. And despite all the uncertainties thrown up by Brexit, the forward sales position was little changed from a year earlier at £2.02bn.

Against completions of 16,449, a total of 17,092 plots of land were added to the land bank, with a further 3,772 plots converted from the strategic land bank. Average selling price inflation on private houses of 2 per cent was enough to cover the rise in input cost inflation.

Analysts at Peel Hunt are forecasting adjusted pre-tax profits for the year to December 2019 of £1.08bn and EPS of 274.4p, from £1.09bn and 283p in 2018.

PERSIMMON (PSN)   
ORD PRICE:2,451pMARKET VALUE:£7.36bn
TOUCH:2,449-2,452p12-MONTH HIGH:2,913pLOW: 1,826p
DIVIDEND YIELD:9.6%PE RATIO:9
NET ASSET VALUE:1,006pNET CASH£1.05bn
Year to 31 DecTurnover (£bn)Pre-tax profit (£bn)Earnings per share (p)Dividend per share (p)
20142.600.4712295
20152.900.63170110
20163.140.78203110*
20173.600.97255235
20183.741.09283235
% change+4+13+11-
Ex-div:13 Jun   
Payment:02 Jul   
*Not including additional dividend of 25p a share