Bovis Homes has become the latest housebuilder to give an upbeat outlook on the sector.
Its shares have climbed 9p to £10.56 as it said it had made a strong start to the year and lifted its proposed dividend. Ahead of its annual meeting, it said the UK economy remained positive and good quality home buyers were able to access effective mortgage finance. Chief executive David Ritchie said:
During the year to date we have traded well in a positive UK housing market, building a strong forward sales position on an increased number of sales outlets.
We are on track to deliver our expected growth for 2015 and a further increase in shareholder returns. We are planning to step up the 2015 full year dividend to 40p per share compared to our previously state commitment to pay at least 35p a share.
Robin Hardy at Shore Capital issued a buy note, saying:
A solid but in-line trading statement from Bovis Homes but note that we are back to first quarter updates so it’s early in the year to be calling profit changes... The statement stresses on a couple of occasions that the year to date has driven ‘expected growth’ and will ‘grow in line’ so there will be no changes to forecasts – we remain slightly above consensus on pretax profits of £172.8m (consensus £169.3m).
The only change to guidance is on the dividend but this is not really a change on examination. Last year the full year dividend was 35p; the prelims promised to pay ‘at least’ 35p in 2015; the consensus is already 38.5p (ours 40.3p) with the bulk at 40p or higher.
This is meant to present greater confidence but with expected earnings per share growth of 31% the commitment to ‘at least 35p’ was always somewhat meaningless. So, nothing really substantial here with no new light on the market, no changes to forecasts but there will be a couple of ‘catch-up’ revisions to dividend per share in the consensus.
In our post-election sector re-rating we pushed the fair value for Bovis up from 990p to 1139p so at 1047p we remain at buy. The market seems happy to over-react to news in the sector at present so expect further positive share price action today.
Liberum also issued a buy recommendation:
Bovis’ interim management statement says that it achieved a reservation rate of 0.65 per site per week, down from 0.69 last year (-6%), showing same sort of pattern as January and February (down 6% from 0.72 to 0.68).
More encouragingly though, management says that selling prices are 2% ahead of management’s expectations set in the fourth quarter of 2014.
