More on Bellway
Bellway: Full year results
Housebuilder Bellway announced respectable earnings for the year to July 2005, despite weak market conditions. Turnover rose 7.8% to £1,178.1m and operating profits by 7.7% to £229.7m. Operating margins remained steady at 19.5%, the number of units sold rose to 7,001 (2004: 6,610) at an average selling price of £163,800 (2004: £161,400).
The company’s land bank (with planning permission), has grown by a further 1,800 plots to 22,500; complementing the fairly strong order book. The order book at end July 2005 stood at £513m compared to £587m last year.
The company seems to looking to urban regeneration projects for short-term growth (sensible, given the weak market for regular housing) and has entered into two large scale schemes in South Tyneside and North Solihull and says it is “hopeful of announcing further such schemes in the next twelve months”.
The company says reservations have improved by 4% (due to a small increase in the number of outlets) and the company expects a small increase in unit sales for the current financial year. Given the fairly strong order book and the two regeneration projects in hand there do not appear to be any immediate problems in achieving full year earnings expectations, despite the weak state of the market. Although we are not bullish on the housing market as a whole, Bellway seems capable of outperforming the sector.
The share trades at 874.5p, on a prospective PE (2006 earnings) of 6.5x with a yield of 3.8%.
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