McCarthy & Stone shares fall despite half-year revenue growth, with company “uniquely placed” to serve growing over-65s population
McCarthy & Stone shares fell today despite the retirement homebuilder reporting a 32 per cent growth in revenue, suggesting investors are profit taking after the shares' strong performance since the IPO in November.
The figures
The trading update reported revenue of £250m in the half-year ending 29 February. This was up year on year from £189m.
The company noted that the population of over-65s in the UK is set to expand by 50 per cent by 2033 and said it is “uniquely placed to capitalise on this demographic opportunity".
Read more: McCarthy & Stone on course to build 3,000 homes this year
McCarthy & Stone’s results were also boosted by house prices, with its average selling price increasing by 12 per cent from £226,000 to £253,000.
During the six months, the company purchased 40 new development sites – down from 44 during the same period in 2015 – representing around 1,700 new units.
Why it’s interesting
The trading update said this performance was in line with previous guidance and expectations for the year are unchanged.
Since its £1bn IPO towards the end of last year, shares in McCarthy & Stone have risen to peaks of up to 287p – up 39 per cent on November's 207p.
Shares closed at 272.75p yesterday but have dropped to as low as 265p – down nearly three per cent – today.
[charts-share-price id="123"]
Read more: £1bn McCarthy & Stone IPO: It's on
Peel Hunt analyst Clyde Lewis said in a note the trading update provided “no surprises”.
He said: "The shares have performed very strongly since the IPO and while the short-term upside looks more limited, we continue to believe there is good upside risk to our margin estimates.”
Lewis said he expects "the group to report much faster profit and asset growth over the medium term. We remain very comfortable with our top of the range forecasts and continue to believe there is upside risk to our margin estimates.”
What McCarthy & Stone said
Clive Fenton, chief executive:
We have delivered another period of strong top-line growth as we seek to address the increasing market demand for retirement housing generated by a rapidly ageing population. With the over-65 age group in the UK expected to increase by over 50% in the next twenty years, and a lack of suitable retirement housing, McCarthy & Stone is uniquely placed to capitalise on this opportunity.
Our operating performance over the past six months has been in line with expectations, with further growth in reservations, legal completions, and c.1,700 additional plots under control in high-quality locations.