Specialist
Former manager at Bellway
Agenda
- UK homebuilding update – build rates and supply-demand dynamics
- Building material and labour pricing impacts on build rates and margins
- H2 2021 strategic positioning of Bellway (LON: BWY) including its land-buying strategy
- Regulatory changes in homebuilding and impacts
Questions
1.
What are the key market trends? How have the market dynamics behaved over the past 18 months? Do you think this market is cooling off, or is it still heating up post-coronavirus?
2.
Are you expecting any reversal in property segments heading into the new year as everyone moves back to work, or might there be normalisation instead of reversal?
3.
Are there any schemes around sustaining demand? You mentioned the government’s new stamp duty scheme finished in March 2021. How might demand trend over the medium term?
4.
You mentioned demand is far outstripping supply and it seems supply might be the catalyst for this market to change, but many land banks have a lot of plots secured for the medium term. Do you think there’s a risk of too much supply to come on-stream from this building segment in the medium term?
5.
How is Bellway differentiated vs competitors, particularly with its land-buying strategy?
6.
Why do you think Bellway’s land-buying strategy is quite lumpy and what are the implications?
7.
What types of sites has Bellway recently purchased and targeted? What does this mean for the company’s future performance?
8.
What are the financial implications of this repositioning for Bellway, if any?
9.
Do you think Bellway management’s target of building 16,000-18,000 homes per year is achievable, given the company is still quite a way off from that?
10.
How does the large amount of supply, coming on-stream from local authorities releasing land, affect buy discipline? How disciplined is Bellway’s buying strategy, given the company is trying to pull the land bank forward and pick off from that future growth?
11.
Are any regions under-penetrated or underdeveloped that Bellway should focus on or expand into? I’m aware you’re more focused on the southwest.
12.
What is the cost price inflation within the home building market? Cost price and raw material inflation have affected multiple sectors. Could you segment this across the two main factors, Brexit and the trends you mentioned?
13.
Do you have an estimate of the increased build costs, which seem quite significant?
14.
Are builders passing build cost on to end consumers and are prices getting passed through quite easily?
15.
How might the supply pressure and labour constraints affect build rates and speed of build? Is there any risk?
16.
Could you quantify Bellway’s gross margins? Industry leader Persimmon’s gross margins are notably higher than Bellway’s and the industry average. Is there anything in land buying Bellway could copy from Persimmon?
17.
How could Bellway improve its gross and net margins?
18.
Are there any potential changes to building regulations and, if so, how might this impact the market? I know there’s net zero 2023.
19.
Are there any possible acquisition targets for Bellway, as this market seems to favour larger plcs?
