Progressive Property & Construction Daily
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Progressive Property & Construction Daily 15 January 2021: LSL, INL, ECEL, SGRO | Strong construction output fuels November GDP ‘beat’ | Fortnight ahead A round-up of market statements, news, economics and views from the property and construction sectors NOTE: This marketing communication has been produced by Progressive Equity Research Limited (PERL) and is a Minor Non-monetary Benefit. It does not contain investment recommendations. The views expressed are those of the research department of PERL. To view the Progressive Property & Construction Daily archive click here. For Progressive research on Property & Construction companies click here. Company news LSL Property Services (LSL, 255p, £268m mkt cap) Estate, lettings and property/financial services agent. FY (Dec) trading update. Guidance: “Trading was stronger than our internal expectations in December in the Financial Services and Surveying Divisions, and we anticipate an improved underlying operating profit for the full year of around £41.5m”. The group particularly benefited in December from strong mortgage completions, strong Lender instructions for surveys as well as the completion of a contractual negotiation with a key lender in relation to valuation services during H2”. In the Financial Services Division, total financial advisers at YE +8%, 2,585. LSL's PRIMIS mortgage completions in December +23% Y/Y. Surveying revenue in December +25% Y/Y. In the Estate Agency Division, residential sales exchange income in December was in line with internal expectations, with the residential sales exchange pipeline at YE more than +65% Y/Y. above the same date in 2019. “There is currently no evidence of a material increase in residential fall-through trends. We continue to monitor this closely”. Net bank debt at YE expected to be c. £2m (YE 19, £42m). Adjusting for Covid-19 related payment deferrals, mainly in relation to tax payments due as agreed with HMRC, the underlying net debt, c. £17m. FY results and trading update, 9 March. Inland Homes (INL, 59p, £134m) Leading brownfield developer, housebuilders and partnership housing group, focused on South and South East. Planning update. Inland’s planning application for Hillingdon Gardens at the former Master Brewer site will not be called in by the Housing Secretary, Robert Jenrick. The site has been the subject of third-party requests to call in for determination by the Secretary of State but it has been decided that the application for 514 homes can be determined at a local level by the Greater London Authority. The plans will transform a derelict former commercial site, creating a residentially led, mixed-use neighbourhood, with a network of pedestrianised areas, landscaped public squares and extensive green spaces. The project will deliver 182 new affordable homes alongside significant contributions towards local infrastructure improvements and biodiversity. Eurocell (ECEL, 227p, £253m) UK retailer and manufacturer, recycler of PVC windows and doors. FY (Dec) trading update. Guidance: “As a result of stronger than anticipated sales for November and December, we now believe underlying profit before tax for the full year 2020 will be ahead of current expectations”. Total group sales: FY -8%, H1 -31%, H2 +15%, Nov-Dec +19%. LFL: FY +8%, H1 -4%, +15%, Nov-Dec +21%. The repair, maintenance and improvement market “was stronger than we anticipated throughout the second half”. House building activity has also been increasing, supported by high levels of mortgage approvals. “Furthermore, we believe we have continued to gain market share”. Net debt at YE, pre-IFRS 16, c. £10m (YE 19, £35m). It remains the group’s intention to return to paying dividends in 2021. FY results, 11 March. Segro (SGRO, 966p, £11,513m) UK’s leading owner and developer of warehouses and industrial space, also active in Europe. Rent collection update. For FY (Dec 20), to date 98% of all rents collected. For UK rents payable in advance for Q1 21, as at 14 January, 88% of rent due has been collected. “This represents a higher collection level than at the equivalent time in each of the three previous quarters. We expect the substantial balance of outstanding rents to be paid by the end of the quarter with the majority now due to be paid monthly”. Economic data Construction output (link) grew by 1.9% M/M in November, reflecting a 3.5% increase in new work that more than offset the 0.6% fall in repair and maintenance; this was the seventh consecutive month of growth since the record decline (40.7%) in April. The level of construction output in November was 0.6% above the February 2020; with repair and maintenance work 7.4% above and new work 3.1% below its pre-pandemic level. Construction output grew by 12.4% in the three months to November 2020 compared with the previous three-month period, because of growth in both new work, 11.9%, and repair and maintenance, 13.2%. The growth in construction output contributed to today’s better than expected 2.6% contraction in November GDP, which compared to Reuters consensus of -5.7%. In other news … House prices. Residential property prices are set to drop by 6.2% in the first quarter of 2021, according to the Reallymoving House Price Forecast, which has historically closely tracked the Land Registry’s Price Paid data, according to Property Industry Eye (link). Reallymoving expects to see home prices fall by 1.2% in January, 2.5% in February and by 2.6% in March. Based on its analysis of 24,000 conveyancing quote forms completed in the last quarter of 2020, average property prices are forecast to fall from £352,106 in December 2020 to £330,295 by March. Once the stamp duty holiday has ended pressure on conveyancers, surveyors and removals firms will ease, alleviating congestion in the system and bringing more reliability to the home move process, according to the report. Fortnight ahead Construction & property: company and economic news 18 Dec Rightmove House prices 19 Watkin Jones Group (WJG) FY results Kier Group (KIE) Trading update Henry Boot (BOOT) Trading update 20 Van Elle (VANL) HY results ONS House prices 21 Countryside Properties (CSP) Trading update 25 (TBC) Crest Nicholson Holdings (CRST) FY results 28 Tritax Big Box (BBOX) Q4 trading update Sources: Companies, Sharecast, Factset, Progressive Equity Research Prices are as at the previous day’s close. .