- First half beats forecasts
- Strong margin guidance
- Full year at the top end of expectations
Housebuilding group Vistry (VTY), which owns the Bovis and Linden brands, revealed trading in the six months to June had ‘significantly’ exceeded its expectations and raised its earnings guidance for the year to December.
‘The business is in great shape and well positioned to maximise the broader market opportunities’, said chief executive Greg Fitzgerald.
STRONGER GROWTH, HIGHER MARGINS
Trading in the six months to June has been ‘excellent’ and has not only surpassed management forecasts but is ‘significantly’ ahead of a strong comparative period last year.
The Kent-based firm said it had seen ‘good demand across all areas of the business’ with an 11% rise in average weekly private sales during the first half and an increase in completions meaning the full year gross margin would be ahead of its 23% target.
The partnerships business is also seen beating its full year margin target thanks to a 24% jump in completions with ‘rapid growth in higher-margin mixed tenure’ properties contributing to the uplift.
The firm flagged the growing need for housing ‘across all tenures from local authorities, housing associations, the private rented sector and elderly accommodation providers’ for the surge in demand at its partnerships business.
The total forward sales position across own brands and partnerships climbed by 16% to £2.14 billion with 92% of forecast units for this year secured.
POSITIVE MOMENTUM
Thanks to its better-than-expected first half performance, the group now expects full year pre-tax profits to be at the top end of market forecasts.
As of yesterday, analysts were forecasting pre-tax profits of between £398 million and £417 million, according to Bloomberg, meaning those at the bottom of the range will need to raise their estimates by around 5%.
The firm said it was managing build-cost inflation on its pre-sold houses thanks to its strong relationships with suppliers, and it expected input cost rises to be around 6% over the course of the year.
It also flagged longer lead times in its site forecasting given capacity constraints in the local authority planning system and regulatory issues such as nutrient neutrality, but said it had the balance sheet strength and breath of operations to be able to cope with any specific issues.
Liberum analyst Charlie Campbell points out the shares are trading below net asset value, and on a 2022 price to earnings ratio of 5.5 times with a yield of 8.7%, also noting 'net cash (£115m) at the end of June, growing profits and positive estimate momentum’.
