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a holding...enough said
its ambitions. BUY.
Chief exec Jolyon Harrison believes that the company he helped to lift out of the doldrums has now achieved the ideal blend of selling expensive land to housebuilders in the south of England and building low-cost homes on brownfield sites in the north of the country, where there is major growth potential.The housebuilding operation focuses on buying brownfield sites in socially deprived areas in the middle of inner cities. Typically, it buys a derelict piece of land in the middle of a council estate that the local council is keen to redevelop but can't find a buyer for. Gleeson then builds conventional family homes and encourages the local residents to buy. Land plots can work out at as little as £10,000, which is impressive given that selling prices average £118,000. Costs are kept down by having small and similarly structured management teams in each operating region, while good-quality, but inexpensive, building products are used throughout.Sales in the first half of the year to the end of December jumped by 56 per cent to 258 homes, and received a considerable boost from the government's Help to Buy scheme, which accounted for 44 per cent of sales. Active sites rose from 27 a year earlier to 33, and further sites are currently under negotiation that could lead to an additional 1,940 plots, taking the land pipeline to in excess of 6,000 plots. The company has ambitions to grow its housebuilding operation to a 1,000-homes-a-year business. That would double its size, based on broker N+1 Singer's 2014 forecasts, and underpins its predictions of rapid EPS growth. Given three forecast upgrades issued by N+1 in 2013, the forecasts used in our table could well understate the growth potential. On the strategic land side, Gleeson buys greenfield sites in the south of England and then secures planning consent before selling them on to housebuilders. Land sales can be erratic. For example, in the last full year to June 2013, they were down from 115 acres to 42.5 acres, and delivered 439 plots. However, there's clearly value in the strategic land bank, which comprises 70 land interests of 3,781 acres, enough to build 21,600 homes.On valuation terms, net assets per share of 212p values the land bank at cost and not development value. That means the price-to-book ratio of 1.9 times, which is among the highest in the sector, is arguably not as stretched as it first appears. What's more, the stock commands a modest forward 2014 price-to-earnings growth ratio of 0.8. In addition, Gleeson has net cash and recently agreed a new three-year £20m revolving credit facility to finance further expansion.Gleeson has been turned around in impressive style, given that four years ago it delivered an operating loss and didn't pay a dividend. The yield is still pretty paltry, but the level of cover and EPS growth potential suggests plenty of scope for improvement.While the demand for houses and building land continues, MJ Gleeson looks well set to deliver on
directors shares and above the ask. very good steady share this one. can only get better as the housing market does. GLA
... becoming most trusted share ... steady 50-60% growth p/a. Never needs to be watched or worried about. Just sure steady growth. A real gem!
Alan Martin splashing out again!!! ...Alan Martin, Financial Director, bought 51 shares in the company on the 5th July 2013 at a price of 332.50p. The Director now holds 10,868 shares. http://www.stockmarketwire.com/article/4628570/Director-Deals-Gleeson-M-J-Group-PLC-GLE.html
Is this guy for real? That said, at least he bought 63 shares opposed to selling the same... Alan Martin, Financial Director, bought 63 shares in the company on the 7th May 2013 at a price of 264.50p. The Director now holds 10,760 shares.
amount of research, I have just bought into GLE ... The interim management statement reads well (follow link) with "The Board is encouraged by the achievements of both Gleeson Homes and Gleeson Strategic Land and remains confident that there will be further substantial improvements in the Group’s trading performance in both the current year and beyond. Although planning delays have created some uncertainty with respect to the number of land sales that will be achieved within the current financial year, the Group’s profit is still expected to be in line with, or possibly better than, market expectations." http://www.mjgleeson.com/assets/files/Interim%20Management%20Statement%201%20May%202013.pdf
Admittedly, Gleeson has taken a while to ditch its non-core operations and to refocus on what it does best. But that restructuring is now largely complete - leaving the group especially well-placed to benefit from the growing demand for land with planning consent. Add that to the comforting cash pile and the prospect of regular dividends from next near, and the shares - which trade at a 31 per cent discount to net assets - are due a re-rating........but as always dyor......
The housebuilding side has also been transformed, albeit after painful writedowns on land bought at the peak of the cycle. True, divisional turnover fell 8 per cent year on year to £32.6m, but only because of a shift away from lower-margin sales to registered social landlords. In fact, last year's £0.4m divisional operating loss was turned into £0.3m operating profit - reflecting an increase in private sales, from 170 units to 255, where margins are higher. And while the average selling price fell from £138,000 a unit to £118,000, this merely reflected the closing out of a high-price sales outlet in Ashford. Gleeson also has no debt pile to worry about and, at the full-year stage, reported a healthy net cash pile that's equivalent to 26p a share - that should help finance additional land purchases. And while Gleeson didn't pay a dividend in 2012, it has, in recent years, returned significant amounts of capital to shareholders through special dividends. Moreover, management reckons that land-bank sales could generate sufficient cash flow to enable regular dividend payments to begin in 2013
"We've been keeping our heads down while we've been restructuring and that's why none of the broking houses follows us at the moment," admits MJ Gleeson's (GLE) chief financial officer, Alan Martin. But while that means there's no analysts' earnings estimates, it's clear that the housebuilder and strategic land specialist is recovering fast - full-year figures for the year to the end of June revealed an operating profit before exceptional items of £0.3m; a big improvement on last year's £2.5m underlying loss. That restructuring effort has involved selling or winding down various non-core operations, including the disposal of three private financial initiative projects (PFIs) for a net £0.3m. That has left Gleeson focused on two businesses - building houses on brownfield sites in northern England, and buying greenfield sites in southern England with a view to boosting the land's value by obtaining planning consent. That latter operation is especially significant because housebuilders are increasingly looking to keep costs down by taking less land through the planning process themselves. Last year, for example, Barratt Developments (BDEV) pushed just 701 plots through the planning system from its 10,500-acre bank of land without permission. "Housebuilders have increased their appetite for over-ready land", notes Mr Martin. Gleeson has been making good progress on the back of that trend and, in the year to end-June, it made five land sales for a combined 115 acres and also secured five new sites covering 228 acres - taking the total land bank to 3,653 acres. The strategic land unit's turnover jumped 41 per cent year on year to £8.2m, lifting operating profit there by 37 per cent to £3.7m.
Chairman Dermot Gleeson said: "The group enjoys a very strong and competitive presence in the two sectors of the market on which it now concentrates: low cost housing development on brown field sites in the North of England; and the promotion through the planning system and subsequent sale of high value green field sites in the South." "The prospect of rising revenue from house sales combined with a planned reduction in the rate of growth of the land bank means that the group expects to become cash generative in the second half of the current financial year and, broadly, to remain so for the foreseeable future." Underlining its confidence in future trading, Gleeson said it hopes to be able to restart regular dividend payments in 2013.
Housebuilder and land dealer MJ Gleeson said annual pre-tax profit more than doubled as it underlined its confidence in future trading by saying it hopes to resume dividend payments in 2013. Pre-tax profit rose to £3.6m for the year to June 30th from £1.6m during the same period a year earlier. Operating profit increased to £3.3m during the period from £0.9m before. Revenue climbed to £41.9m from £41.4m. The group said that unless there is a further severe downturn in the UK, the group will continue to grow profits in the current year and beyond. Gleeson Homes returned to profitability, posting an operating profit of £0.3m compared to a loss of £0.4m earlier.
The shares were broadly flat in morning trading.
The firm has also continued to take advantage of low land prices in the north of England, purchasing a further 11 sites since the beginning of the year, which have added 522 plots to the total land bank.
The total number of private development homes sold by the end of June is expected to exceed the previous financial year by approximately 60%. Gleeson confirms that mortgage availability is still a problem but has seen a "significant" level of activity arising from the government's FirstBuy scheme.
Gleeson the house builder and strategic land specialist, says it has opened seven new sales outlets since the end of last year and seen an increase in reservations. The volume of net private reservations in the period to the end of April increased by 49% compared to the same period of last year, and the order book for future completions is 131 homes, an improvement of