More on Wilson Bowden
Wilson Bowden: H1 2006 trading statement
Housebuilder Wilson Bowden reported that improvement in sentiment in many parts of the housing market was evident in the first half of 2006.
The company’s trading statement was fairly positive. The forward order book was up 52% to 2,266 units, although this did include 380 units due for completion in 2007/9. Even excluding the longer dated sales, the order book was up a healthy 26.5%.
The company said average selling price per unit sold increased by 6% to about £207k due to increases in size (units sold this year were on average 3.1% larger than last year) as well as increases in selling price and changes in sales mix.
In terms of total square footage, total sales were similar to last year.
The bad news was that units completed in H1 were down 2.5% (although this will be compensated by stronger H2 sales) and, more seriously, weaker margins. Margins are under pressure because costs (particularly land costs) have risen faster than the company has been able to increase selling prices.
In commercial property the company reported a “noticeable slackening” in demand for office and industrial property in ‘some locations’.
The half year performance is likely to be reasonably good, something that is especially surprising given the dismal performance last year. The better performance seems to owe much to a more benign housing market but it is far to early to tell if the slump in the housing market has ended, and thus the outlook for the medium term still remains uncertain.
The share trades at 1423p, on a prospective PE (2007 earnings) of 7.8x, within the sector range, with a yield of 3.7%.
Random picks: Associated British Ports | GCap Media | Hiscox | Redrow | Sage | Spectris | Vodafone | Xstrata | Go-Ahead Group | Resolution