More on Bellway
Bellway trading statement
Bellway said profits for the year to July 2005 would be in line with market expectations.
Legal completions have risen by 6% to 7,001 units for the year to July 2005 while the average selling price improved to £165,000 (2004: £161,400). Growth has slowed in the second half of the year, in the first half Bellway reported a 7.4% increase in units sold at an average selling price of £167,000.
Further evidence of weakening is available in the forward order book which stands at stands at £513m compared to last year’s level of £587m. The company has been increasing the use of selling incentives to sway reluctant buys and this is likely to erode margins next year. Margins for the current year are in line with last years’ 19.5%.
The company has also increased the number selling outlets by 10% this year in an attempt to increase sales. The concerns with the stock are those of the sector, that of sustaining growth as the property market cools.
The share trades at 865p, on a prospective PE (2006 earnings) of 6.1x, at the lower end of the sector range with a yield of 3.7%.
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