Housebuilders were among the worst performers in the immediate aftermath of the general election result but today's statement from sector constituent Bellway (BWY) strikes a reassuring tone, driving the shares 4.5% higher to £29.78.
The update, covering the period from 1 February to 4 June, reveals strong sales demand, improved margin performance and a bumper order book of £900m.
FIVE STAR RATING
Guidance is for volume growth of 10% in the year to 31 July, ahead of the company's original target. Notably the company has also regained its status as a five star housebuilder, the highest rating on offer and one of only two national housebuilders to receive this accolade.
The importance of maintaining high operational standards was reinforced by the problems which faced Bellway's rival Bovis Homes (BVS) around the turn of the year.
The company also notes that while the outcome of the election has led to some uncertainty over future policy 'all political parties recognise the need for increased housing output'.
WHAT DO THE ANALYSTS THINK?
Numis reiterates its 'buy' recommendation and £37.95 price target, analyst Chris Millington suggesting the market isn't giving the company sufficient credit for its robust performance.
'Despite Bellway’s strong growth and returns (we estimate a 20.5% return on equity on closing equity in 2017) the shares are trading on 1.32-times price to net tangible asset value, 6.9-times PE (price to earnings ratio) and a yield of 5.3% (which is three times covered),' Millington says. 'This is a material discount to the sector which we believe is unwarranted.'
His colleague at Canaccord Genuity, Aynsley Lammin also stays at 'buy', albeit with a less bullish £31.00 price target, commenting: 'The shares continue to look attractive to us given the strong delivery and financial performance.'
