- Persimmon plc (LON:PSN) (OTCMKTS:PSMMY), one of the UK’s leading home builders today released a trading update covering the first quarter of the year.
- Persimmon is moving swiftly from an initial post-lockdown recovery and onto real growth with sales rates tracking well ahead of pre-pandemic levels.
- The group’s forward order book stands at c. £3.0bn, 23% ahead of last year, and 11% ahead of 2019’s level.
- Selling prices are edging higher, at an average of c. £252,000 (2020 – c. £244,500) and the group is accelerating its build rates to keep up with demand.
Expections For Persimmon
Commenting on the trading update, Steve Clayton, HL Select fund manager said:
“Persimmon’s current run-rate of sales suggests the full-year outlook could be significantly better than previous expectations. That explains the bounce in the shares in early trading, up 2% to 3210p. The market was expecting the group to match 2019’s outcome this year, but rather than simply recovering, the group looks to have moved straight onto outright growth, if it can maintain momentum in the business.
There are challenges ahead. Stamp Duty is coming back, and can Persimmon actually maintain production at the levels currently demanded? Persimmon’s earlier caution means it faces pressure to lift the rate of new site openings. Adding 6,000 new land plots in the quarter is a good start here, but buying land is not the same as building on it. The group are taking a cautious approach, suggesting that build rates will only match the 2019 level for the rest of the year, so analysts will be wary of pushing forecasts too far forwards at this stage. But with over £900m of cash in the bank, Persimmon faces its challenges from a position of huge strength.”
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