BELLWAY is one of the UK's smaller quoted housebuilders. To read some commentators, one would have thought that the UK housebuilding industry is about to be obliterated. However sincere the UK government may be in attempting to give the housebuildi
ng industry a boost, it is perhaps unfortunate suggestions of an imminent freeze or, indeed, abolition of some levels of stamp duty have been allowed to circulate as this will inevitably give some prospective buyers pause for thought. However, on a medium-term view Bellway looks quite interesting.
It has modest gearing and, indeed, has indicated it may consider suitable acquisitions which, given the problems within its industry, might not be that difficult to identify. Bellway has reduced its headcount and, in common with its peer group, has been providing incentives to prospective buyers, including, ironically, the paying of stamp duty. Bellway has one of the strongest order books, although, at the recent trading update, it confirmed the challenges it faced.
The investment market remains extremely wary of the housebuilding sector. It is certainly essential that one adopts a very selective approach, as I have little doubt that there are further disappointments ahead.
Forecasting in the contemporary climate is difficult, but consensus suggests Bellway will see a sharp fall in earnings per share over the next 18 months, with a commensurate paring in the dividend. Nevertheless, there seems little doubt Bellway will survive; any correction from the recent rally could well be an investment opportunity.
• The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.
The full article contains 292 words and appears in The Scotsman newspaper.
