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Big dividend hike at MJ Gleeson

Affordable housebuilding in the north of England and land sales in the south is still a winning combination
September 27, 2017

MJ Gleeson’s (GLE) unique blend of building affordable housing in the north of England and pulling land through the planning process in the south continued to boost profits in the year to June 2017, and shareholders were rewarded with a two-thirds hike in the dividend.

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Operating profit rose 17 per cent to £33m, while net cash flow jumped 42 per cent to £19.7m. Affordable home sales rose from 904 units to 1,013, while average selling prices were a little lower at £122,700. The target now is to double sales to 2,000 within five years. Outlets operating at the end of June were up from 48 a year earlier to 59, and the land bank supports 11 years of output at current rates.

Building on innercity sites deemed unattractive means that land prices remain relatively low, and with continued focus on reducing costs, gross profit margins grew from 31.1 per cent to 33 per cent. On the strategic land side, profits rose 17.6 per cent to £12m, with 126 acres of land sold to housebuilders, enough for 841 plots.

A total of 92 per cent of its customers are first-time buyers, with two-thirds using the Help to Buy scheme. However, with the average couple earning around £37,500, which would qualify for a £131,000 mortgage, Gleeson homes are still within affordable reach, according to chief executive Jolyon Harrison.

Analysts at N+1 Singer are forecasting adjusted pre-tax profits for the year to June 2018 of £36m and EPS of 52.7p (up from £33m and 48.3p in 2017).