viewBellway PLC

Bellway going like the clappers


Bellway (LON:BWY) rose to a 52-week high this morning after a trading update revealed a 2.3% rise in the average selling price of its houses.

The house builder completed the sale of 2,597 homes in the six months to the end of January, up 5.8% from 2,455 in the same period a year earlier.

The average selling price (ASP) of homes sold increased by 2.3% to £187,000 from £182,753 the year before. The increase was ascribed to continuing changes in product and geographic mix.

The board anticipates that the average selling price will continue its upward trend for the remainder of this financial year.

Broker Panmure Gordon acknowledged the strong trading update but said solid growth in units, price and margin against the backdrop of relatively stagnant market condition is the case throughout the house building sector.

As a result, the broker reckons with the shares trading at a premium to the sector’s price/net asset value (NAV) ratio, “the valuation looks up with events”.

Panmure Gordon’s ‘hold’ recommendation and 1063p price target remain unchanged.

“The outlook for the business is relativity positive in our view with continued growth forecast in unit completions, ASPs (on mix) and net margin. However, the pace of underlying growth in unit completions on a per site per week basis is low, and underlying prices are stagnant (growth is currently mix-driven) so we are not seeing anything at Bellway that we are not seeing elsewhere in the sector at present. The margin will continue to progress due to the replacement of old low margin land with new higher margin land,” Panmure Gordon said.

“Weekly sales reservations stood at 97 compared to 89 a year ago – the driver being site growth. We consider this a healthy position for the company to be in going into the important Spring selling season,” the broker added.

Shares in Bellway were up 3.4% to 1,160p in mid-morning trading.

Quick facts: Bellway PLC

Price: 2800 GBX

Market: LSE
Market Cap: £3.45 billion

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