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Gleeson targets steep climb in completions

However, demand for the group's strategic land business is more uncertain
September 14, 2020

Final quarter completions were almost entirely wiped out during MJ Gleeson’s (GLE) 2020 financial year, but management is shooting for 2,000 completions by 2022, which would constitute an 87 per cent rise on last year. The affordable homes builder is at 90 per cent of pre-Covid production capacity but expects to reach full strength by Christmas.

IC TIP: Buy at 606p

Forward sales totalled a record £145m, or 1,033 units, up around two-thirds in value on June last year. While the low average sales price of the group’s homes means the stamp duty break has not provided the lure of upfront savings to would-be buyers, those customers have also escaped mortgage availability issues associated with higher loan-to-value products, says chief executive James Thomson. “It’s a really small proportion of our customers that have LTV of over 85 per cent,” he says.

There is greater uncertainty over the strategic land business, which sold just two sites compared with nine the prior year. However, demand from housebuilders has started to pick back up, Mr Thomson said, with the five “well advanced” deals in line with pre-coronavirus terms.  

Peel Hunt forecasts adjusted pre-tax profits of £16.3m and EPS of 22.8p for the year to June 2021, rising to £38.7m and 57.8p the following year. 

MJ GLEESON (GLE)   
ORD PRICE:606pMARKET VALUE:£ 353m
TOUCH:604-622p12-MONTH HIGH:1,010pLOW: 512p
DIVIDEND YIELD:NilPE RATIO:70
NET ASSET VALUE:365pNET CASH:£16.8m
Year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201614228.243.214.5
201716033.049.124.0
201819737.056.032.0
201925041.261.534.5
20201475.578.650.0
% change-41-86-86-
Ex-div:na   
Payment:na