In a trading update, the FTSE 250 housebuilder reported that orders are at a record £1.87bn as housing demand has bounced back from the coronavirus (COVID-19) lockdown.
Reservations are up by 30.6% to 239 per week in the nine weeks since August 1, 2020, compared to a year earlier, it said. Based on this start sales completions should total around 9,000 in the current year to end July 2021 and barring any further lockdown disruption, the group added.
Bellway had to shut down its operations in March due to the COVID-19 restrictions and reopened in May. As a result, completions fell by 31% to 7,722 in the year to end July 2020.
Revenues fell by a similar amount to £2.23bn though profits dropped by 64% to £237mln as Bellway took a £46.8mln exceptional charge for remedial fire safety repairs in apartment blocks plus an additional £25.8mln for COVID-19 related expenses.
Bellway also cancelled its interim dividend, but with the strong order book and good recent cash collection said it will restore the final payment at 50p (2019: 100p), a level it said it expects to increase further as earnings recover.
Net cash was £1.4mln, the group added, with bank facilities of £545mln.
Liberum sees Bellway as 'top pick'
Broker Liberum added that Bellway reported ‘clean’ profits around 10% ahead of consensus.
The order book equates to around 74% of 2021 unit guidance, which provides good visibility on price and volume and alongside the strong balance sheet has enabled it to become one of the first housebuilders to reinstate its dividend.
A top pick in the sector given its balance sheet strength, experienced management and good exposure the strongest areas of the housing market, added the broker.
Liberum’s target price is 3,150p compared to 2,520p, down 4% today.
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