Broker snap: Bellway the pick of mid-sized housebuilders

21st Jan 2011 13:11

Bellway is still the preferred mid-size builder of financial services firm Martrix Group, which said that the surprise recovery in the housebuilder's sales has made it more likely that full year financial targets will be met."Progress on the key metrics provide confidence for the outcome of the current year based on the forward sales position and the group's potential margin growth from the new sites coming on stream," says Matrix analyst Simon Brown. "Although sales rates up to end September 2010 were below those of last year over the same period, sales improved through to the end of November and into 2011 despite the hiatus of December caused by the normal seasonal decline and poor weather. As there are more sites open (200 vs 185 last year) and despite buyer confidence being under pressure on the back of the spending cuts following the government's spending review, the level of completions in the first half are now expected to reach the level (2,247) seen in the prior year's first six months," Brown added. Matrix has reiterated its "buy" recommendation and target price of 1,050p. "The NAV [net asset value] per share was 855p for end of July 2010, which we expect to increase to 880p by July 2011, without any write back of land values from the NRV [net realisable value] provisioning exercise of two years ago. As land prices have started to rise, particularly in the southern half of the UK, further provisioning is seen as very unlikely," Brown concluded.