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Bellway on track for 10,000 homes

Demand for new homes shows no sign of abating
March 20, 2018

Bellway (BWY) ticked all the right boxes in the six months to January 2018, and is on target to deliver more than 10,000 homes a year for the first time in its history. Despite the moribund atmosphere in the secondary housing market, demand for newly-built homes remained brisk, and reservations in the six weeks to 1 February were up from the previous year, which was itself up 17.7 per cent on the year before.

IC TIP: Buy at 3145p

Upward pricing pressure continued to come through material costs and as a result of skilled labour shortages, but the increases were more than offset by an 8 per cent rise in average selling prices to £275,900. Bellway continued to replenish its land bank, acquiring 6,726 plots at an average gross margin of over 24 per cent as land costs remained benign. Consequently, there was net debt of £131.4m at the half-year, although a small net cash position is expected by the July year-end. Land creditors continued to provide a source of finance, rising from £301.7m a year earlier to £367.3m.

Analysts at Peel Hunt are forecasting adjusted pre-tax profits of £647m and EPS of 425.9p for the year to July 2018 (from £560.7 and 369p in 2017).

BELLWAY (BWY)   
ORD PRICE:3,145pMARKET VALUE:£3.87bn
TOUCH:3,145-3,151p12-MONTH HIGH:3,805pLOW: 2,654p
DIVIDEND YIELD:4.2%PE RATIO:8
NET ASSET VALUE:1,889pNET DEBT:6%
Half-year to 31 JanTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20171.1524816437.5
20181.3228919248
% change+15+17+17+28
Ex-div:24 May   
Payment:02 Jul