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Highlights
- Persimmon Plc delivered higher revenue and profit margin for the half-year ended 30 June 2021.
- The company delivered 7,406 houses with 300 active sites during the year and total landholdings of 85,771 plots.
- At present, the company’s forward sales stand at £2.23 billion, up by 9%, ensuring current performance to continue in the second half of this year.
Persimmon Plc (LON: PSN), one of the leading housebuilding companies in the United Kingdom, in its half-yearly result reported an interim profit of £480.1 million, an increase of 64% year-on-year (H12020: £292.4 million) on revenue of £1.84 billion (H12020: £1.19 billion) during the six months ended 30 June 2021.
The company which sells its inventory under various brand names like Persimmon Homes, Charles Church, and Westbury Partnerships, reported an average home selling price of £236,199 during the period.
The company reported industry-leading performance delivering 7,406 houses to its customers with new housing sales operating margin of 27.6%. The company has a nationwide presence operating on around 300 sites during 2021 and having landholding of 85,771 plots. Also, the company continues to maintain a pre-Covid build rate over the last 12 months with a focus on delivering high-quality houses.
The current boom in the UK Housing market
Housing prices in the UK market have been on a surge since pre-pandemic time. According to the data compiled by the Office for National Statistics (ONS), the average house price is up by £31,000 to £266,000 across the country in the past one year. The property prices across England and Northern Ireland are up by 13.2% in annual terms because of waiving off of the stamp duty on properties up to £500,000, and high demand for big houses due to work from the home scenario and pent-up demand due to pandemic.
Growth factors for Persimmon Plc?
- The company has been delivering industry-leading performance with higher levels of customer services and HBF satisfaction ratings. At present, the forward sales stand at £2.23 billion, up by 9%, ensuring current performance to continue in the second half of this year.
- Persimmon Plc’s last three years average Return on Capital Employed (ROCE), which is a measure of the company’s profitability and capital efficiency, is at 36.5%, which indicates the company business performance is growing at a sustainable rate, while its after-tax return on equity (ROE) is at 22.6%.
- The company has a regular dividend payout policy, with the latest dividend of 110p per share, which will be paid on 13 August 2021. Overall, the company has an annual dividend yield of over 8%, making it a good investment opportunity for investors who want regular dividend payout along with stock price appreciation.
Related Article: Lens on Persimmon and Barratt Developments as UK House Prices Touch Record High
Why the share price has been underperforming
Although, the company has given good revenue and a consistent profit over the year. Still, the company’s share price is up by just 2% in the last one year:
The company’s performance is lagging probably due to the investors’ apprehension related to housing market and the worries related to economy as the Covid-19 fears continue with mutant variants. The housing market is a cyclic industry, which means the company operating in the segment will have higher revenue and profit margin when the economy is performing well and expanding and lower profitability during the economic slowdown.
Persimmon Plc was trading at GBX 2872, down by 1.31% as of 10.13 AM on 19 August 2021. Its current market cap stands at £9285.82 million
