MJ Gleeson on track for full year amid strong demand

Urban regeneration and land development group MJ Gleeson said on Thursday that it was confident it would achieve full-year 2019 results in line with expectations amid strong demand.

In a statement to be made at the annual general meeting later in London, chairman Dermot Gleeson said demand was strong, with net reservations up more than 40% over the last six months.

"Land continues to be available at sensible prices and the pipeline remains strong," he said.

Gleeson Homes has a pipeline of 12,490 plots with a gross development value of £1.5bn, of which 7,253 plots are owned and 5,237 are conditionally purchased.

Gleeson said build activity has increased in recent months driven by strong demand and the division currently has 62 active sites versus 58 this time last year.

The company said that the Help to Buy scheme remains popular, with 71% of its customers taking advantage of it so far this year while other buyers continue to be attracted by the group's bespoke purchaser assistance packages.

"Very strong customer demand in all regions, good mortgage availability and our ability to offer attractive levels of affordability to our customers, means that the outlook for the division remains very positive," said Gleeson.

The group expects completion at Gleeson Homes to be up 10% in the half year to the end of December 2018 compared with the prior half year total of 593 units. In addition, it expects an increase in completions for the year to 30 June 2019 of more than 15% compared with the prior year total of 1,225 units.

Gleeson Strategic Land continues to experience strong demand for consented land, the company said. The division's land pipeline currently consists of 58 sites which have the potential to deliver approximately 21,789 plots and the portfolio includes nine sites which now have planning permission.

Liberum said guidance for homes volumes to grow over 15% this year is a touch better than its estimate of 14%. It also said that the 40% increase in net reservations is "impressive" as the business is only operating from 7% more sites.

"We maintain our buy recommendation and 835p target price, which is based on sum of the parts, valuing Gleeson Homes as a growing business, whose fortunes are less tied into the housing market than peers given the lack of supply in its chosen markets and as local affordability remains unstretched," it said.

Canaccord Genuity, which reiterated its 'buy' rating on the stock, said the update was "solid".

"Consensus looks well underpinned and the group looks to be on track with its growth strategy as it benefits from its exposure to a relatively attractive part of the UK housing market. We see more attractive value after the recent share price fall, of course assuming we avoid a macro collapse relating to Brexit."

At 1050 GMT the shares were up 1.9% to 674.25p.