UK housebuilder Persimmon plc reports that it has had an excellent first half of the year. It announced details in an update ahead of its half-year results to 30 June 2017. This statement covers the period from 1 January 2017 to 30 June.
The group says it has increased legal completion volumes by 8% to 7,794 new homes (the comparable figure in 2016 was 7,238)
The 556 increase demonstrates the group’s drive to meet demand in all its regional markets across the UK. The average selling price rose by 3.5% to c. £213,000 (2016: £205,762). Revenue grew by 12% to reach £1.66bn (2016: £1.49bn).
Persimmon scores home run in excellent first half
- Trading excellent
- Legal completions up
- Average house price up
- Revenues up
- 95 new sites opened this year
Persimmon CEO Jeff Fairburn, courtesy of Persimmon
Market reaction positive
Helal Miah, investment research analyst at The Share Centre, rates the shares a hold. “Persimmon’s trading update for the first half of the year was very encouraging, resulting in the share price opening up by roughly 5% in early trading today,” says Miah.
“The group remains active in land bank and plot acquisitions and has a cash pile of £1,120m” he adds. “These numbers produced suggest that all is still very well with not just Persimmon, but the house building market in general.”
“The sector’s share price recovery since the EU referendum reflects that. However, we are of the view that shares in the sector are fairly valued, taking into account the buoyant demand for new homes.”
Persimmon a 'hold'
“Given the strong recovery and recent signs of a moderating housing market, and the very cyclical nature of the sector, we continue to recommend Persimmon as a ‘hold’ for investors willing to accept a higher level of risk.”
Persimmon says it has continued to experience good levels of customer demand since the group’s annual general meeting trading update on 27 April 2017. The market took the snap UK general election in its stride, it adds.
Consumer confidence remains resilient and compelling mortgage rates continue to offer good support to new home buyers. Sales in May and June were healthy. It expects the group’s strong trading through the first half of the year.