2nd Jul 2015 09:35
LONDON (Alliance News) - Persimmon PLC on Thursday said it traded well in the first half of 2015, with legal completion volumes and revenue both rising, average selling prices higher, and its total forward sales value at the end of June up by 15%, defying the slowdown in planning applications and housebuying activity prior to the UK General Election in May.
The FTSE 100-listed housebuilder said new-home legal completion volumes in the six months to the end of June rose by 7% to 6,855 units, with total revenue rising to GBP1.34 billion from GBP1.20 billion a year earlier. Visitors to its sites in the UK are in line year-on-year and cancellation rates remain low, the company said.
Persimmon said demand has been backed by an increasingly competitive mortgage market, along with continued employment growth and a boost to disposable income levels in the UK.
Its average selling price in the half increased by 4% to GBP195,000, up from GBP186,970 a year earlier. The company also said its forward sales volumes to the private market were up by 12% in the half at 4,606 new homes, with an average selling price of GBP213,000, 4% higher year-on-year. Its total forward sales value at the end of June was GBP1.36 billion, up 15%.
Persimmon said it opened 122 new sites in the first half of the year, despite a slowdown in the planning application process which emerged around the election. That meant its outlet network was 5% larger at the half-year against the start of 2015. It plans to open a further 125 sites in the second half of 2015.
The company also said the land market continues to provide attractive investment opportunities and it has acquired around 11,500 new plots of land in the UK in the first half of the year, bringing its total consented land bank to around 92,400 plots at the end of June.
Persimmon will publish first-half results on August 18.
Shares in the housebuilder were down 0.2% to 2,011.56 pence, likely due to data from the Nationwide Building Society, which found house price growth in the UK in June slowed against May, bringing annual growth to its lowest level in two years.
Augustin Eden, an analyst at Accendo Markets, said "fickle traders are jumping ship" following the house price data but disputes the notion that housebuilders have peaked, given the Nationwide survey still showed house prices in June were up 3.3% year-on-year. "While that?s bad for normal people who want a house, it?s great for the folks that build them as long as there are buyers in the market ? and there clearly are," Eden said.
"All the signs are pointing in the right direction for the company, and the dip in the share price will provide a buying opportunity for those who are not already long. The runaway success of Persimmon?s share price since the recession is impressive even by housebuilder's standards, and the low interest rate climate will fuel further growth," said David Madden, an analyst with IG Group.
Shore Capital, while keeping a Hold rating on Persimmon, said investors in the company are sitting on some substantial short-term gains, with Persimmon shares up by 27% since the start of the year and by 23% since the election. Robin Hardy, a Shore analyst, said the housebuilding sector will need "firm evidence of a new earnings upgrade cycle" if the shares are to rise any further.
That view is backed by Liberum, which said the strong recent performance in Persimmon shares has left is valuation looked stretched, even as it acknowledged trading for the company is robust. "We expect more subdued performance in the shares from now, even if catalysts for a reversal are hard to spot," said Liberum analyst Charlie Campbell. Liberum has a Hold rating and 1,610 price target on Persimmon.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Persimmon