When it comes to the housing market, there may be doubts about affordability, worries over interest rates, and a distinct downturn in transactional volume, but for the new-build market, half-year numbers from Redrow (RDW) paint a completely different picture.
Legal completions rose by 14 per cent, while operating profits were up by nearly a quarter to a record £175m. This suggests that the group remains on target to achieve its goal of delivering £430m of annual pre-tax profits by 2020, and shareholders were rewarded with a 50 per cent hike in the interim dividend. Analysts at Peel Hunt are now forecasting a full-year payout of 26p a share, up from 17p the previous year.
Strong cash generation and a tight hold on costs meant gearing fell to just 3 per cent, and there should be a decent cash surplus by the June 2019 year-end. And with a forward order book up 5 per cent from a year earlier at £1.05bn, Redrow added 4,315 plots to the consented land bank, taking the total to 27,600.
Peel Hunt forecasts for the full year have been upgraded to adjusted pre-tax profits of £365m and EPS of 81.5p (from £315m and 69.9p in 2017).
| REDROW (RDW) | ||||
| ORD PRICE: | 612p | MARKET VALUE: | £2.26bn | |
| TOUCH: | 611-612p | 12-MONTH HIGH: | 674p | LOW: 445p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 363p | NET DEBT: | 3% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 739 | 140 | 31.0 | 6 |
| 2017 | 890 | 176 | 39.5 | 9 |
| % change | +20 | +26 | +27 | +50 |
| Ex-div: | 05 Apr | |||
| Payment: | 04 May |
