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Crest Nicholson remains on target

Continued growth is expected to boost revenue to £1.4bn by 2019
January 24, 2018

Crest Nicholson (CRST) provided further evidence of the rude health of the housebuilding sector with another solid performance in the year to October 2017, and the housebuilder remains on target to deliver £1.4bn in revenue by October 2019.

IC TIP: Buy at 522p

Completions grew by 2 per cent to 2,935 units, while average selling prices were 5 per cent higher at £388,000, although average selling prices in affordable units and homes being sold for private rental registered a more modest 2 per cent increase to £340,000. However, softer pricing in central London and slower-than-anticipated sales there meant that operating margins eased back to 20.3 per cent, while the return on capital employed fell from 31.3 per cent to 29.7 per cent. New land opportunities are now being brought forward in the more affordable outer zones of London, and the group’s exposure to central London is being reduced.  

Trading outlets increased by 9 per cent to 51, while forward sales at mid-January were 8 per cent ahead of the previous year at £576m. And the gross development value of the land pipeline rose by 10.2 per cent to £11.7bn. Net cash was lower, but this reflected the group’s continued investment in land and new outlets. A total of 3,000 units of strategic land were acquired, taking the strategic land bank up to 18,174 units, while the short-term land bank rose to 16,260, equivalent to 5.5 years of supply.

Build cost inflation remained in line with expectations, and reflected imported inflation on sterling weakness as well as skilled labour shortages pushing up wages.

Analysts at Peel Hunt are forecasting lower margins and higher interest costs for the year to October 2018, and now expect adjusted pre-tax profit of £230m and EPS of 72.3p (from £208m and 65.1p in FY2017).

CREST NICHOLSON (CRST)  
ORD PRICE:522pMARKET VALUE:£1.34bn
TOUCH:522-523p12-MONTH HIGH:649pLOW: 470p
DIVIDEND YIELD:6.3%PE RATIO:8
NET ASSET VALUE:320pNET CASH:£33.2m

 

Year to 31 OctTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20130.5381.027.16.5
20140.6411739.314.3
20150.8115449.319.7
20161.0019562.027.6
20171.0420766.133.0
% change+4+6+7+20
Ex-div:15 Mar   
Payment:6 Apr