With today's eagerly anticipated half year report demonstrating a decent profit for the housebuilding giant, Persimmon (LON:PSN) could be seen as an attractive proposition for investors. The half year report for the six months to the end of June showed a pre-tax profit of £516.5 million, a healthy increase of 13 per cent from the year before. It has also declared that its average selling price has risen 1 per cent to £215,813 over the course of the year, as reported by IG.
Share price rises on the back of profit margin
Unsurprisingly, this latest news has had a positive effect on the value of the company's shares, increasing by 1.1 per cent to 2471.00 (BST 09.21), making it one of the big success stories of the day, having closed at 2444.00 yesterday. The signs are that it will continue to increase during the course of the day, outperforming an index which has been subdued by perceived negative Trump commentary on trade negotiations.
Conditions in regional market supportive
Persimmon Chairman Roger Devlin is quoted by Alliance News as saying, "Conditions in the group's regional housing market continues to be supportive, with resilient consumer confidence benefitting from strong employment levels, low interest rates and a competitive mortgage market. We expect to experience the normal seasonal increase in customer interest as the holiday season draws to a close in early September."
According to Alliance News, Persimmon has sold 8402 homes during the six-month period to June and secured 11,072 plots of land and its "current forward sales position is at £2.12 billion, 6.0 percent higher than last year."
Future sales not as buoyant
In a warning shot across the bow, however, senior analyst at Hargreaves Lansdown, Laith Khalaf, is reported by Proactive Investors as casting a dampener on future growth prospects, citing the moderation in house price growth and less buoyant sales, combined with the effect of the government's help-to-buy scheme which is described as a 'lynchpin' in the housing market, with three years left to run and an extension possible.