On Wednesday, Citi updated its stance on Bellway Plc. (LON::LN), raising the price target to £34.50 from the previous £33.68, while reiterating a Buy rating on the stock. The adjustment follows the release of the company’s fiscal year 2024 results, which were in line with expectations.
Bellway reported an underlying profit before tax (PBT) of approximately £226 million, marginally above Citi’s estimate of around £220 million and the consensus estimate of about £216 million.
The homebuilder’s gross margin was reported at 16%, with an operating profit of approximately £238 million, leading to a margin of 10%. The first nine weeks of current trading have shown a robust private sales rate at 0.59, marking a 44% increase, or 0.49 excluding bulk sales.
Bellway’s total order book stood at 5,109 homes, valued at around £1.43 billion, up 16% from the previous year, with private sold coverage exceeding 60%.
Looking ahead, assuming market conditions remain consistent, Bellway’s management has provided guidance for fiscal year 2025, anticipating at least 8,500 unit completions, which would be an 11% increase including stable social housing volumes.
The average selling price (ASP) is expected to be around £310,000, with an operating margin of approximately 11%, factoring in a rise in administrative expenses of around 10%. The forecast for FY25 suggests that the volume of homes completed will be weighted towards the first half of the year.
Furthermore, Bellway has set its sights on further volume growth in fiscal year 2026, which is expected to be supported by an increase in outlets and a healthy order book. This forward-looking statement indicates the company’s optimism about its growth trajectory and market positioning in the coming years.
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