Robust residential performance buoys developer St Modwen’s outlook

by: Edward Murray
  • 06/12/2016
  • 0
Robust residential performance buoys developer St Modwen’s outlook
UK property developer St Modwen has issued an upbeat trading statement on the back of strong results in its housebuilding division.

The firm said residential activity continued to be a key growth area for the business both through its housebuilding subsidiary, St Modwen Homes, and the sale of ‘oven-ready’ development sites to third party housebuilders.

Since July 2016, St. Modwen Homes has commenced work on three new sites and is now active on a total of 18 sites, with sales volumes and profits anticipated to be higher in the second half of the year compared to the first half.

Mark Allan, the developer’s new chief executive, said: “I am pleased to report that, since the publication of its half year results, the company has continued to trade well, demonstrating excellent resilience in an unsettled environment.”

He added: “St. Modwen’s business is focused on creating genuine value from its deep and diverse portfolio of development and investment opportunities. Everything I have seen in my first few weeks in the business suggests that it is well placed to continue doing so.”

The trading statement was welcomed by the market with The Share Centre recommending St Modwen as a ‘buy’ for higher-risk investors seeking growth.

Graham Spooner, investment research analyst at The Share Centre, said: “Interested investors should appreciate that the new CEO Mark Allan also highlighted in the update that the business continues to trade well given market uncertainty. This is supported by demand from third party housebuilders to complete sales of residential land for prices at or above book value.”

“The sector has been put under the microscope since the referendum vote, with many experts predicting that pressures will continue to mount,” added Spooner. “We subsequently raised the risk of the stock and would recommend St Modwen as a ‘buy’ for higher risk investors who do not believe there will be a crash in the property market. Investors would be advised to drip feed as we get closer to Article 50 being enacted and the likelihood of increased UK market volatility as a result.”

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