ii view: Bellway restarts the dividend

New records for both revenues and plots of land acquired at this housebuilder. We assess prospects.   

First-half results to 31 January

• Revenue up 11.6% to £1.72 billion
• Pre-tax profit down 4% to £280 million
• Interim dividend of 35p per share
• Net cash of £346 million, up from £4.6 million last year

Chairman Paul Hampden Smith said:

"Bellway has delivered a good first half trading performance, achieving record first half revenue because of its strong brought forward sales position and investment in work-in-progress.  We have delivered this growth, while retaining our core focus on quality and customer care and have been recognised as a five-star homebuilder for the fifth consecutive year.

"As the country prepares to emerge from the latest national 'lockdown', Bellway is in an excellent position to continue its long-term, disciplined growth strategy, increasing the supply of good quality, new homes, while generating future value for our stakeholders."

ii round-up:

Founded in 1946, housebuilder Bellway (LSE:BWY) today operates through more than 20 regional divisions across the UK.

It employs over 2,000 people and in its last full financial year to the end of July completed 7,522 homes, down from 10,892 the year before due to Covid-19 disruption. 

It focuses on providing traditional family housing outside of London and apartments within London.

For a round-up of these latest results, please click here. 

ii view:

In addition to its core Bellway brand, the group also trades using the Bellway London and Ashberry brands. Ashberry provides an alternative for its customers - from elevations and layout, to finishes and fittings. The housebuilder has been busy rolling out its 'Artisan Collection' standard house type range, enabling further long-term cost savings through standardisation. 

For investors, both a scheduled late June ending of the current stamp duty holiday and pending changes to reign in the ‘Help to Buy’ scheme could both have some dampening impact on future buyer demand. Broader investor concerns regarding a rise in inflation following significant Central Bank action post the pandemic also ask questions of future interest rate policy.  

But a restarting of dividend payments, and an 8%-plus rise in the forward order book as of mid-March, offer reassurance and confidence in the outlook. So does the £453 million purchase of over 8,800 plots across 54 sites. Successive governments have shown a strong appetite to assist the industry with a recently announced 95% mortgage guarantee scheme offering further evidence. In all, and sat on an estimated dividend yield of over 3%, momentum appears to remain in Bellway’s favour.

Positives: 

• Robust customer demand
• Recommenced dividend payment

Negatives

• A reigning in of government house buyer incentives
• Dividend payment reduced

The average rating of stock market analysts:

Strong buy