Having taken a plunge many house builders are now possibly on the up again.

http://www.guardian.co.uk/business/marketforceslive/2012/feb/27/bovis-down-despite-profit-rise

Ex-divi next wed, 28th Feb, 3.5p

Very contrarian today.

Interim Mangement Statement.

Monday, July 9

• Housebuilder Bovis updates on trading on Monday, after rvials Persimmon and Taylor Wimpey last week stuck to the familiar script - the sector is managing to grow in a wider market that is stagnant, but steady enough. Robin Hunt, an analyst at Peel Hunt, expects to see Bovis report further progress on site openings, which he sees as offering it better momentum than elsewhere in the sector. “Like-for-like trends also likely to be a little better than the larger national players due to higher south east bias,” he said

LONDON (ShareCast) - Results season for the house builders is upon us, and Bovis Homes kicks it off on Monday after releasing what Peel Hunt regarded as the weakest trading statement of all the companies in the sector back in July.

Peel Hunt's beef is with Bovis's margins, which the broker thinks look set to slip below the levels seen in the second half of last year.

Peel Hunt is forecasting headline pre-tax profit of £14.6m, or £10.7m if land sale profits are excluded.

"We exclude land because of its weight: it represents 30% of pure housing profits," Peel Hunt explains.

"Bovis is trying hard to rectify a poor ROIC [return on investment capital] but we still cannot see the return being higher than 6.5% even by 2014 with the risks being more towards undershooting than beating current consensus. This must drag on valuation," argues the broker, which has a "sell" recommendation on Bovis.

Half Yearly report

Operational highlights

· Legal completions of 944 homes (H1 2011: 801 homes), an increase of 18% with an average sales price of £164,400 (H1 2011: £163,400)

· Average active sales outlets increased by 21% to 82 in H1 2012 from 68 in H1 2011

· Two land sales achieved in H1 2012, delivering a profit of £3.9 million (H1 2011: Nil)

· 1,037 consented plots on eight sites added to the land bank during H1 2012, with a further 419 consented plots on two sites added in H2 to date

· Contracts in place at 20 August 2012 to acquire another circa 1,200 plots on ten sites, the majority of which are expected to be added to the consented land bank in H2 2012

· Terms agreed in principle to acquire a further 20 sites, representing in excess of 3,000 plots

· Consented land bank of 13,620 plots as at 30 June 2012, with potential gross profit of £574 million, calculated using prevailing sales prices and build costs (31 December 2011: 13,723 plots with gross profit potential of £524 million)

· 19,829 potential plots of strategic land (31 December 2011: 18,749 potential plots)

Current trading and outlook

· Strong trading in 2012 to date (33 trading weeks) with a 19% increase in private reservations to 1,253 homes (2011: 1,049) at a sales rate of 0.46 net private reservations per site per week

· Sales rates in the last seven weeks at 0.46 net private reservations per site per week, slightly ahead of the comparable prior year period

· Cumulative sales achieved to date for 2012 legal completion of 1,968 homes (2011: 1,607)

· Sales prices achieved to date marginally ahead of Group expectations

· Active sales outlets currently at 82, with an expected average of 83 for 2012 (2011: 73), an increase of 14%

· Average sales price for 2012 legal completions expected to be circa 6% greater than 2011, reflecting significant improvements in mix

· Housing gross margin expected to be between 21% and 22% for 2012 full year (2011: 20.8%), with an expected operating margin of between 12% and 13% (2011: 10.0%)

. Further significant improvement in return on capital employed for the 2012 full year, expected to approach 7.5% (2011: 5.0%)

i would have thought those numbers pretty good ........ given that bvs has performed far worse than either bdev or tw over the last year, a dabble may prove profitable





bvs = blue, tw = green, bdev = red, bkg = black

it's tempting to buy into housebuilders, perhaps adding persimmon into the mix - but which one (or two)?

Maybe those which are strongest in the south east or south west of the country?
Though there may be a considerable number of sites in the north, developers may struggle to sell plots with a decent profit margin, assuming they can find mortgagors at all.

I have TW (free shares) and PSN for my sins.

Or maybe a sector bet?

interesting thought skinny .... confess i have never bought sectors, but for no good reason

Questor share tip: Bovis a buy as profits double
Bovis Homes is focusing on building family houses in the south of England. Questor says buy.
By Garry White
7:00AM BST 21 Aug 2012
Comment
Bovis Homes
491.6p -1.4
Questor says HOLD

Bovis Homes Group

Housebuilder Bovis Homes is benefiting from land bought cheaply during the downturn. A doubling in pre-tax profit has led to a doubling of the company's dividend.

Like other players in the sector, Bovis has used the downturn to replenish its land bank cheaply all the way through the crisis. In the first half, 1,037 plots on eight sites were added to its land bank, with a further 419 plots on two sites in the second half to date.

Contracts are being finalised for a further 1,200 plots on 10 sites, which should make their way into the land bank in the current financial year.

Management are focusing on building family homes rather than flats because they offer higher margins. Geographically the majority are in the south of England, where demand – and average selling prices – are likely to be higher.
In the six months to June, revenues rose 27pc to £170.3m and pre-tax profits doubled to £16.2m.

The interim dividend was also doubled to 3p and will be paid on November 23. The board plans to continue to increase the dividend as earnings per share rise.

The operating margin for the full year is expected to be between 12pc and 13pc, compared with 10pc last year. This is the effect of the cheaper land purchases working through. Reassuringly, Bovis said sales prices achieved to date are marginally ahead of group expectations.

Trading conditions in recent weeks have remained stable, despite ongoing macroeconomic uncertainty, which underscores the resilience of the UK market.

Bovis is continuing to invest in its business and, providing we have a relatively stable market, profit growth should be strong.

The current year's earnings multiple is 17.7, falling to 13.5 next year and the prospective yield is 1.6pc.

Last tipped at 453.6p in January, the shares remain a buy.

Bovis Homes is the latest of the UK's housebuilders to be hitting the heights, reaching a peak today of 522.5p, just short of its recent 52-week high of 524p. At that price, the shares are up over 30% since the beginning of June.

And while earnings are still way below pre-slump levels, we have had two years of strong recovery and have two more such years forecast -- the City is expecting to see earnings per share growth of 60% this year and another 40% in 2013.

Interim Management Statement

Current trading

The Group has now secured sufficient reservations to deliver its anticipated full year legal completions. Net private reservations achieved in the 45 weeks to 9 November 2012 were 1,669 (2011: 1,517). Net reservations per site per week for this period have averaged 0.46, in line with the rate achieved in the same period in 2011. The average number of active sales outlets during this period has increased by 12%. The Group is currently operating from 83 active sales outlets and expects the number at the year end to approach 90, with in excess of 30 new sales outlets launched during 2012.

Average sales price achieved in the year to date for private reservations expected to legally complete in 2012 is circa £190,000, which compares with £180,100 achieved on private legal completions in 2011. This increase reflects an improvement in the sales mix by location and size of home. Prices in the housing market are broadly stable with prices being generally stronger in the south of England.

Final Results

Operational highlights
· 2012 profit before tax at the upper end of market expectations
· Strong profit growth reflecting compound positive effect of:
· 15% growth in legal completions to 2,355 homes (2011: 2,045) from an average of 82 active sales outlets in 2012 (2011: 73)
· 5% increase in average sales price to £170,700 (2011: £162,400)
· Significant increase in operating profit margin to 13.4% (2011: 10.0%)
· Strong land investment in 3,501 consented plots during 2012:
· 2,651 plots added to the consented land bank during the year
· 850 consented plots legally contracted, awaiting satisfaction of conditions, of which 408 plots have been added to the consented land bank during early 2013
· Significant growth in future profit potential with 13,776 consented plots at 31 December 2012, with potential gross profit of £600 million, calculated using current sales prices and current build costs (31 December 2011: 13,723 plots with gross profit potential of £524 million)
· 19,318 potential plots of strategic land as at 31 December 2012 (2011: 18,749 potential plots)

Current trading
· 350 private reservations achieved in first eight weeks of 2013 (2012: 320), an increase of 9%
· Average sales price on cumulative private reservations for 2013 to date increased to circa £200,000 (2012 full year average private sales price: £188,700), with sales prices achieved in line with Group expectations
· Investment in 611 new plots of consented land during the first eight weeks of 2013 continuing to fuel growth

Citi tipsters also cast their eyes over the housing market a day after Bovis Homes (LON:BVS) and Persimmon (LON:PSN) reported their results yesterday.

Citi reckons Bovis shares are likely to take a breather after a strong run as it cuts the stock to ‘neutral’ from ‘buy’.

The housebuilder is now nearing the broker’s target price of 710p.

“More promotion of strategic land in 2013 should negatively impact 2013 profits by around £3.5m, but this should boost the land bank and improve future profitability,” Citi added.

As for Persimmon, Citi believes the cash inflow from operating activities is a sound basis for the group to deliver its capital return strategy without denting the balance sheet.

Shares in housebuilder Bovis Homes (LON:BVS) fell away this morning after a downgrade from Deutsche Bank.

The broker is bringing its recommendation back to ‘hold’ after its recent share price rally.

Sold my holding - been in since Jan 2012 at 410p

Interim Management Statement

Current trading

Trading in the 19 weeks to 10 May 2013 has been strong with the Group achieving 989 private net reservations (2012: 783), a 26% increase year on year. This has been driven by an 11% increase in the average number of active sales outlets to 91 (2012: 82), and a 14% improvement in the average private sales rate to 0.57 net reservations per site per week (2012: 0.50). The number of visitors to the Group's sites has increased by 29% in the year to date compared to the same period last year.

Having started 2013 with 249 forward sold private homes, as at 10 May 2013 the Group held 1,238 private sales for 2013 legal completion (2012: 1,013). Including social housing units expected to legally complete in 2013, at 10 May 2013 the Group's total sales position to date was 1,852 units (2012: 1,437).

Sales prices achieved on reservations to date have been modestly above management's expectations. The Group expects the average sales price in the half year results to be materially ahead of the prior year comparable period due to improved mix. The housing profit margin is also expected to increase compared to the first half of 2012.

The strong rate of reservations achieved, with a significant contribution from new sales outlets, will deliver a material increase in legal completions in the second half of the year. Legal completion volumes in the first half of 2013 are expected to be at a similar level to the first half of 2012.

Subject to current market conditions continuing, sales rates are expected to support both the delivery of the Group's volume growth targets for 2013 and allow the Group to enhance its year end forward order book, supporting further growth in 2014.