Mark Crouch, market analyst at eToro, says Bellway's (LSE:BWY) update is a reassuring one for investors, given a backdrop of higher mortgage rates and persistent affordability pressures.
The analyst, in a note following Tuesday's update, argued that the UK housebuilder saw demand soften in April and May, but reservation rates remain ahead of first-half levels, cancellation rates are low, and management has reiterated underlying operating profit guidance of £320m–£330m despite renewed inflationary pressure on materials and energy.
Crouch points to the slight easing in the builder's forward order book and a rise in net debt as the builder invests for growth.
This morning, Bellway reported a forward order book of 5,345 homes valued at £1,570m, weekly private reservations of 151 homes and net debt of £236m, while noting gearing is modest and continued buybacks, a higher interim dividend and plans to open 40+ outlets in the second half underline management’s confidence.
The eToro analyst expects the market will get a clear test of the apparent confidence when Bellway issues its next trading update for the year ending 31 July, scheduled for 11 August.
