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Vistry beats forecasts after margin gains

The housebuilder formerly-known-as-Bovis is aiming to save £35m from its newly-acquired scale
February 27, 2020

Vistry (VTY) - formerly Bovis Homes - has established a solid operating base to integrate the Linden Homes and partnerships divisions it acquired from Galliford Try (GFRD) at the start of the year, reporting a pre-tax profit ahead of consensus expectations for 2019. Efforts to improve building cost efficiency resulted in a 2 per cent reduction in construction costs per square foot, which offset the inflation impacting the wider housebuilding market and flat sales prices and resulted in a 60 basis-point improvement in the operating margin to 17 per cent.

IC TIP: Buy at 1,277p

Completions were 3 per cent ahead of the prior year period, as management pursues its aim of “controlled” volume growth. The average sales rate per week was also 16 per cent higher and like peers, the mid-cap house-builder indicated that transactions have begun to pick up further, reporting a 15 per cent rise in the average weekly underlying sales rate per site over the first seven weeks of 2020. 

The focus now is on generating cost synergies of at least £35m from its newly-acquired scale by the end of 2021. That includes an 8 per cent reduction in headcount and procurement savings across its three housing ranges.

Analysts at Peel Hunt forecast adjusted pre-tax profits of £350m and EPS of 132p for 2020, rising to £408m and 155p the following year.

VISTRY GROUP (VTY)   
ORD PRICE:1,277pMARKET VALUE:£2.78bn
TOUCH:1,275-1,277p12-MONTH HIGH:1,491pLOW: 923p
DIVIDEND YIELD:4.8%PE RATIO:13
NET ASSET VALUE:584pNET CASH:£339m*
Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)**
20150.9516095.440.0
20161.0515590.145.0
20171.0311468.047.5
20181.0616810257
20191.1317510261.5
% change+7+4-+8
Ex-div:24 Dec   
Payment:29 May   
*Includes lease liabilities of £23m **Excludes special dividend of 45p in 2018