2nd July 2015
As Persimmon updates the market, Helal Miah, investment research analyst at The Share Centre, explains what it mean for investors…
Persimmon’s first half trading figures proved to be in-line with expectations and continue to reflect the buoyant market for new homes. Total revenues increased by 12% to £1.34bn, as legal completions rose by 7%, while the average selling price for each home rose by 4% to £195,000.
Investors should acknowledge that visitor numbers remain high, similar to last year’s levels, while customer demand has been supported by an increasingly competitive mortgage market. Despite the slowdown in planning applications prior to the general election, the group still opened a further 122 new sites taking the network of active sites to 395 across the country.
Going forward, the house builder is looking to open another 125 new development sites during the second half of the year and is actively looking to strengthen the land bank. We believe this strategy is in-line with the ongoing strong demand for housing as the UK economy and population grows.
We currently recommend Persimmon as a ‘hold’ for medium risk investors seeking growth, but would not discourage investors buying on dips in the share price. However, our preferences in the sector are Taylor Wimpey and Berkeley Group.