A strong trading update from Bovis Homes (BVS) fails to excite the market, the stock roughly flat at 783.5p. The housebuilder put in a robust showing for the first six months of 2014 across all key metrics, continuing the trend from 2013 full year results in February.
Chief executive officer (CEO) David Ritchie points out Bovis' record first half for completions. This is expected to lead to a material increase in profit for the first half year over 2013.
During the six months to the end of June, Bovis completed 1,487 homes, including 106 Private Rental Sector units, an increase of 54%. Average selling prices rose 11% to £210,000 thanks to a stronger mix of homes and modest improvements in house prices.
Significant housing profit growth, combined with modest land sale profits and lower overheads, should see Bovis' operating margins hit 15% or more. They were 11.1% this time last year.
Visibility is also encouraging, net private reservations jumping 31% to 1,816. Cumulative reservations should come in 44% higher at 3,297 homes. Record investment in the landbank means 4,597 consented plots across 23 sites added in the half.
Rachel Applegate, analyst at Panmure Gordon, maintains the broker's Buy recommendation and a target price of 953p,calling the shares, 'the best value within the housebuilding sector.'