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

Trading Update

"The Group has performed well in the first half of 2013 with a significant further improvement in housing profit, delivered from the ongoing successful execution of the Group's growth strategy. Trading in the first half of 2013 has been strong and the Group has achieved a 40% increase in private reservations compared to the same period in 2012. Continuing its success in the land market, the Group has added 2,767 new consented plots to the land bank. With the positive progress in executing its growth strategy, the Group is well positioned to deliver higher shareholder returns."

I see today IC have a target of 900p in weeks.

Half Yearly Report

· With market house price increases estimated at 1% to 2% to date, average sales price increased by 15% to £188,500 (H1 2012: £164,400) primarily due to mix, modestly ahead of Group's expectations
· Legal completions of 963 homes (H1 2012: 944 homes)
· Average active sales outlets increased by 11% to 91 in H1 2013 (2012: 82)
· 2,767 consented plots on 18 sites added to the land bank during H1 2013
· Contracts in place as at 30 June 2013 to acquire another 1,018 plots on 11 sites, the majority of which are expected to be added to the consented land bank in H2 2013
· Consented land bank of 15,579 plots as at 30 June 2013, with potential gross profit of £733 million, calculated using prevailing sales prices and build costs (31 December 2012: 13,776 plots with gross profit potential of £600 million)
· 19,341 potential plots of strategic land (31 December 2012: 19,318 potential plots)

Shore Capital Hold 770.75 - - Retains

Prime Markets Buy 770.75 850.00 850.00 Reiterates

Numis Hold 770.75 - 800.00 Reiterates

Jefferies International Buy 770.75 909.00 995.00 Retains

Deutsche Bank Buy 770.75 900.00 900.00 Reiterates

Citigroup Buy 765.00 765.00 835.00 885.00 Upgrades

Bought 2000 at 743p and hope to make a quick 10p!

Interim Management Statement

Strong profit growth for 2013 and a significantly increased forward sales position for 2014


Bovis Homes Group PLC is today issuing an Interim Management Statement for the period from 1 July 2013.

Current trading
The Group has continued to trade strongly throughout the period, in line with expectations as at the time of its Interim Results announcement.

The Group achieved its targeted private reservations total for 2013 legal completion around the end of September, significantly earlier than in prior years. The Group has followed its plan to accelerate the building of its private forward order book for 2014, which is already materially greater than the private forward order book as at 1 January 2013.

Net private reservations achieved in the 44 weeks to 1 November 2013 were 2,390, 45% ahead of the 1,650 achieved in the same period in 2012. Net reservations per site per week for this period have averaged 0.60, an increase of 30% over the 0.46 achieved in the comparable period in 2012. The average number of active sales outlets during this period has increased by 11%.

Trading conditions remain encouraging, with improved access to higher loan to value mortgages and Government support in the form of the Help to Buy scheme contributing to an already more confident housing market.

Land acquisitions

The opportunity to purchase high quality consented land capable of delivering attractive returns remains significant. The Group has continued to invest assertively and has now added circa 3,300 plots on 22 sites to the consented land bank to date during 2013 at full hurdle rate returns. A further circa 1,200 plots on 13 sites are contracted, a number of which are expected to be added to the consented land bank before the year end.

Additionally the Group has a large number of plots under negotiation with land owners for contract either in late 2013 or 2014 with a significant proportion already with planning consent. Some of these plots are on relatively large sites where appropriate deferred terms are being negotiated to ensure strong returns can be achieved.

With the sites already acquired during 2013 and the positive pipeline, the Group is confident of delivering further strong sales outlet growth in 2014 and 2015.

Borrowings

As at 7 November 2013, the Group had net debt of £125 million. Given the phasing of housing receipts and land payments, the Group expects to end 2013 with a modest net debt position.

Outlook

The Group anticipates delivering circa 2,800 legal completions in 2013 and is well placed to achieve this, given the current sales position. The Group continues to expect the average sales price for 2013 legal completions to be at least 10% greater than that achieved in 2012, primarily reflecting mix benefits.

The gross profit margin for 2013 is expected to increase to at least 23%, benefiting from the higher proportion of legal completions on post-downturn sites. With improving overhead efficiency, the operating margin for 2013 is expected to approach 15%, strongly ahead of the 13.4% achieved in 2012.

The increasing operating margin, combined with the improving capital turn, is expected to deliver a ROCE of at least 10% in 2013. With a significantly enhanced forward order book at the start of 2014 and an increasing number of active sales outlets during 2014, the Group expects to continue its strong growth in volumes, profits and therefore ROCE, all based on current market conditions continuing.

David Ritchie, the Chief Executive of Bovis Homes Group PLC said:

"Our strong trading performance has continued through the third quarter and we are confident of achieving our targeted result for the year as whole. Our forward order book is in its best position for many years. With further increases in active sales outlets, supported by ongoing assertive land buying, the Group is confident of its future prospects and ability to deliver significantly improved returns."

Final Results

Feb 25:

Barclays: Underweight - TP up from 807.30p to 835.40p - Reiteration

Citigroup: Neutral - TP up from 940p to 980p - DownGrade

Liberum Capital: Buy - TP up from 911p to 1034p - Reiteration

UBS: Buy - TP up from 1000p to 1050p - Reiteration

Half Yearly Report

· 54% increase in legal completions to 1,487 homes (H1 2013: 963 homes)
· Average sales price on private legal completions, excluding PRS homes, of £239,500, 20% higher than H1 2013 (£200,200), driven by mix and modest improvements in house prices
· A record 4,597 consented plots on 23 sites added to the land bank
· Growing consented land bank of 17,702 plots as at 30 June 2014 (31 December 2013: 14,638 plots)
· 19,608 plots of strategic land (31 December 2013: 20,108)

Current trading and outlook
· Cumulative sales achieved to week 32 for 2014 legal completion of 3,530 homes (2013: 2,505), with the Group being nearly fully sold for legal completions in 2014
· Average sales price for 2014 legal completions expected to be between £210,000 and £215,000
· 2014 operating margin expected to increase to between 17% and 18% (2013: 14.9%)
· Material improvement in ROCE for 2014, now expected to be circa 16.0% (2013: 10.4%)

Updated strategic plan set out to deliver optimal scale and returns
· Growing to an optimal scale with annual volumes of between 5,000 and 6,000 new homes
· Managing the housing cycle to maximise returns, while effectively stewarding shareholders' capital, targeting ROCE of at least 20% by 2016
· With the Board's confidence in the strategic plan, intention to pay an enhanced dividend of 35 pence per share in 2014 and at least 35 pence per share in 2015 (2013: 13.5 pence) and a revised dividend policy thereafter

Final Results

StockMarketWire.com
Bovis Homes reports a record number of first half legal completions, made possible by the high quality land investments made during the last few years.

The group says the average sales price on legal completions increased by 6% to £222,000 (H1 2014: £210,000) and that it is on track to deliver further growth in shareholder returns.

Chief executive David Ritchie said: "We continue to trade well in a positive UK housing market delivering a strong forward sales and build position on an increased number of sales outlets. As a result we are on track to deliver our expected growth for 2015 and a further increase in return on capital employed supported by robust profit margins and improved capital turn.

"Future growth in shareholder returns is being underpinned by further disciplined investment in new consented and strategic land."

The group said that as previously guided in May of this year, its legal completion profile in 2015 is expected to be more weighted to the second half of the year than was the case in the prior year (H1 2014: 41%).

Given the higher proportion of traditional family homes along with robust housing market conditions, the Group's average private sales price increased to £264,000, 10% ahead of the comparative of £240,000 in H1 2014.

Overall, including the increased share of social housing, the Group's average sales price increased by 6% to £222,000 (H1 2014: £210,000). The group has been trading from an average of 100 sales outlets during the year to date which represents an 8% increase on the comparative period. Weekly private sales rates to date have remained robust at an average of 0.63 net private reservations per site against the strong comparative in 2014 of 0.65.

The total forward sales position for 2015 delivery, including legal completions to date, stood at 3,505 homes at 30 June 2015 (30 June 2014: 3,297). Housing production is currently 13% ahead of the prior year which provides a strong base for the planned volume growth for 2015. The Group remains on track to deliver its expected total volume of legal completions for 2015.

Merrill Lynch note:
"We view the fundamentals in the UK House Builders’ sector as positive long term with the four pillars of support, the Government, the Bank of England/ the banks, consumers and the house builders, all pointing to a healthy environment. That said, with the sector performing strongly post the election, we believe valuations are looking stretched and see the chance of an extended correction increasing, given the budget announcements yesterday and the potential for interest rate fears to emerge . We downgrade Bovis Homes to Neutral and adjust POs across the sector

Yesterday’s ‘Summer Budget 2015’ contained a restriction on tax relief on buy to let mortgages which is negative to sector sentiment, and, limitations on non-dom tax status. We believe sentiment could be further dulled by any (fears of) rising interest rate commentary in H2 that could lead to an extended correction (sector fell c12% Oct/Nov ‘03), especially considering the current elevated price levels.

In the last 3 and 12 months ahead of the budget, the sector rose by 25% and 57% respectively, a move that has more than outstripped consensus upgrades, ie the stocks have rerated over the period and now trade on an average forward PER of 10.0x, up from c8x a year ago. At the same time, the market has also rerated, from c13x in mid 2014, to 14x, which implies that the sector discount has closed.

Historically, the UK House Builders sector has performed well from November to March, before performing poorly in May and June. This year, as mentioned above, this traditionally weak period has been strong, in fact, the sector has only declined in absolute terms twice since July 2014, in September (-0.4%), and January ’15 (-2.3%). Bearish interest rate rise comments could be a correction catalyst.

We have downgraded Bovis Homes from Buy to Neutral following its 50% move from its 2015 low, to year high. This is the only recommendation change. We also raise our POs on a number of stocks; Bovis Homes from 1,000p to 1,170p, BDEV from 475p to 540p, Bellway from 2,050p to 2,500p, and Redrow from 450p to 515p.

Our key picks in the sector are Persimmon, where we have raised 2016 EPS forecasts by c6%, Taylor Wimpey which also has very strong cash flow characteristics, and Redrow. We are especially attracted to PSN and TW which offer dividend yields of 5.9%, and 7.9% respectively. Redrow, pays a very modest dividend, but on a PE basis is the cheapest stock in the sector on 8.4x 2016E."

The warning of interest rate rises to come in early 2016 seems to have hit all of the house builders today. Presumably this marks the very early stage of the 'down cycle' of the housing stocks?

sp has been walloped by ~10% this morning on the latest trading update

that looks awfully overdone to me, as it was scarcely poor ..... and other housing stocks have also been hit

i understand the very high end of the market being hit in central london, but recent reactions in the housing sector look very odd to me .... or am i being unusually stupid even by my high standards?

Comment from Deustche Bank:
"Against a tide of positive results in the sector, Bovis trading update feels like a cold shower. FY 15 profitability impacted as planning delays push back completions on its new higher margin sites, although for FY 16 mgmt indicate the increasing build costs should be offset by a greater mix benefit to selling price. Trading at 1.25x 2016 NTAV Bovis is the cheapest stock in the sector, and against bottom end of peer ROCE this is hard to dispute (although dividend yield is becoming increasingly interesting). However for those willing to believe the group can drive towards the 28% ROCE on new land, any weakness as consensus reshuffles following this update could prove a buying opportunity.

1) Robust trading continues. Bovis reports that sales have strengthened into autumn, with a sales rate since the start of September +20% (excluding PRS) to 0.62 reservations per site, with the group 38% sold for next year (+18%).
2) But margin impacted by planning delays on newer sites: DB PBT ests reduced by 6% in FY 15. While Bovis reports it has reservations that cover its planned 8% growth in completions for 2015 (DB ests were 10%), and an average sales price for 2015 in line with guidance (+ 7%), delays in planning and therefore completions on its newer higher margins sites have reduced upside in margins YoY. Reflecting this change in margin guidance we have reduced our PBT est for FY 15 by 6%. For FY 16 management indicates that while the contribution of the new higher margins sites should be captured the upwards creep of build cost inflation (upped from 7% to 7-8%) implies a smaller upside in gross margin YoY than previously indicated. Management believes this downside to margin expectations should be largely offset by a higher than consensus average selling price driven by mix. However while management has retained its target for 20% ROCE in FY 16, and believes there should be little movement in consensus for next year, we have reduced our FY 16 PBT by 8% (moving in line with consensus).
3) Land acquisition slows, but discipline continues. To date Bovis reports it has added 25 sites (c 4,000 plots), and while this is equivalent to replacement it remains short of the 40 new sites targeted. Management indicates that there remains scope to reach its target by YE, although it highlights that progress has been slowed by the uncertainty created by the change in social rent. The group reiterates however that there remains no shortage of opportunities in the land market, and discipline remains (an av ROCE of land in 2015 of c28%).

We set our price target at 1.5x 2017E NTAV discounted back at 8% plus dividends paid out to this date. Downside risks include: lower margins made on the new land, lower volumes seen to leverage Bovis’ operational costs."

on the other hand, barclays was less enthusiastic

i opted for some BDEV in lieu

Due for a rebound!

Bovis Homes unveils record profits

StockMarketWire.com

Bovis Homes Group reports record profits for the year to the end of December with significant revenue growth driven by record legal completions and a strong increase in average sales.

The group generated total revenue of GBP946.5 million, an increase of 17% on the previous year (2014: �809.4 million). Housing revenue was �910.1 million, 16% ahead of the prior year (2014: �783.6 million) and other revenue was �6.4 million (2014: �4.2 million). Land sales revenue, associated with four land sales, was �30.0 million in 2015, compared to three land sales achieved in 2014 with a total revenue of �21.6 million.

The Group delivered a 19% increase in operating profit for the year ended 31 December 2015 to �163.5 million (2014: �137.6 million) at an operating profit margin of 17.3% (2014: 17.0%). Total gross profit was �232.3 million (gross margin: 24.5%), compared with �197.2 million (gross margin: 24.4%) in 2014. The profit on land sales in 2015 was �8.8 million (2014: �3.9 million) as the Group continues its strategy of managing its capital base through the disposal of parcels of land on large sites, often strategically sourced.

Profit before tax increased by 20% to �160.1 million, comprising operating profit of �163.5 million, net financing charges of �5.2 million and a profit from joint ventures of �1.8 million. This compares to �133.5 million of profit before tax in 2014, which comprised �137.6 million of operating profit, �4.4 million of net financing charges and a profit from joint ventures of �0.3 million. The profit from joint ventures in 2015 included the benefits of revaluing both the Bovis Peer LLP and IIH Oak Investors LLP PRS property portfolios in the period. Basic earnings per share for the year improved by 21% to 95.4p compared to 78.6p in 2014. This improvement has resulted in a return on equity of 15% (2014: 13%).

Chief executive David Ritchie said: "We have delivered record profit driven by another year of record volume. We have invested well during 2015 in new consented land and achieved a strong level of conversion from our strategic land bank. While it has been a time of operational challenge with fast moving market conditions, we are delivering our strategic growth plan and have evolved our management and business structure at the start of 2016 to support further growth. Assuming market conditions remain stable we are confident in our ability to improve return on capital employed further in 2016.

"In the current housing market, our plan envisages the business delivering sustainable growth over the next few years to achieve annual volumes of between 5,000 and 6,000 new homes.

"I am pleased to reconfirm that, in line with guidance, the Board is recommending a full year dividend of 40 pence, an increase of 14%, reflecting our confidence in the Group's future growth prospects."

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For those interested from Motley Fool today..........

Value buy or value trap?

Is it too late to put fresh money into housebuilders such as Bovis Homes Group (LSE:BVS)? Bovis shares have fallen by about 30% since last August, while other housing stocks have also fallen. In my view, the market is pricing in a cyclical peak for the housing market. The problem is that at a company-specific level, the outlook still seems very attractive.

Current broker forecasts suggest that Bovis will report a 16 per cent rise in earnings per share this year, with a 14 per cent increase expected in 2017. At 830p, Bovis shares trade on a forecast P/E of just 7.5, falling to 6.5 for 2017.

This looks cheap, but P/E ratings can be misleading for cyclical stocks. If house prices have peaked, then Bovis profits could fall sharply. My preferred measure is the price/book ratio. Bovis shares have a book value of 712.7p per share, giving them a price/book ratio of 1.2. This is much lower than most other housebuilders, and looks quite reasonable.

With a forecast yield of 5.5%, Bovis could be good value -- if you believe that the housing market has further to run.

imo, BVS makes an excellent sipp or similar stock, not only because of the juicy yield, but also because its houses are at the more affordable end of the market

it is indisputable that the country has to build a zillion more homes a year, so one way or another, i am very happy to be holding this in my sipp even if at a rather higher price than today