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MJ Gleeson PLC raises full-year guidance

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MJ Gleeson PLC (LON:GLE) has resumed paying dividends and raised full-year guidance after a strong first half to its fiscal year.

The housebuilder saw profit before tax rise 52.6% to £20.3mln in the six months to the end of December from £13.3mln in the same period of 2019.

Revenue jumped 35.8% to £142.6mln from £105.0mln, with the number of homes sold increasing 17.3% to 951 from 811 a year earlier and the average selling price improving 9.1% to £140,600 from £128,900.

After suspending dividend payments in March last year the company has proposed an interim dividend of 5p.

The company ended 2020 with a cash balance of £31.6mln, up 3.3% from £30.6mln a year earlier.

“Gleeson Homes opened a record 17 sites during the first half, enters the second half with a strong forward order book and now expects to deliver 1,775 homes in the current financial year. The timing of opening sites for sales means that we are comfortably on track to deliver our original target of 2,000 homes next financial year,” said James Thompson, the chief executive of MJ Gleeson.

“Gleeson Strategic Land is experiencing strong demand for consented land from both medium and large-sized housebuilders and has a healthy pipeline of sites, four of which are in a sale process and expected to complete in the second half of the financial year.

“The group is well-placed for the future. In the absence of any unforeseen circumstances, the board is confident that results for the full year to 30 June 2021 will be significantly ahead of current market consensus,” he added.

Liberum nudged up its price target to 940p from 925p in the wake of what it described as “better than expected” results.

The broker’s full-year earnings per share forecast has been increased by 12%.

“Demand persists for Gleeson’s low cost homes, with a strong order book giving good visibility. Over 60% of Gleeson’s customers are key workers, and all its customers find it cheaper to buy than to rent,” Liberum noted.

“We see 28% upside to our raised target price, which remains based on valuing Homes as a growth business and Strategic Land as a perpetuity. Homes will deliver 15% five-year cagr [compounded annualised growth rate] for unit completions to 2022 in spite of the pandemic,” it added.

Shares in MJ Gleeson were up 4.4% at 768p.

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