What to do with Bellway after a 44% increase
update on preliminary numbers for 2024
Short description
Click here for the initial analysis with a detailed description, market comparison, financial analysis, risks, and opportunities.
Bellway PLC is a British homebuilder that has been delivering high-quality homes for over 75 years. It operates nationwide and builds both apartments and family homes.It also creates entire neighbourhoods and communities.
Bellway concentrates on purchasing land, obtaining permits, and constructing homes that meet local demand. The company also places great emphasis on sustainability and energy-efficient housing.
Why we selected Bellway
In the long term, we see some structural trends. In England, there is a housing shortage. Additionally, many older homes are being renovated (as we saw with Wickes). Often, entire neighbourhoods are redeveloped, and this is where Bellway comes back into the picture.
The main reason to invest in Bellway is their land portfolio. A significant portion of this land already has planning permissions. In theory, Bellway can operate for about five years with this land bank without needing to purchase new land. However, note that not all of the land is fully owned.
In the current market, where there is a housing shortage and inflation, owning land is certainly an advantage. Over the long term, this will only increase in value.
We selected Bellway two years ago when we could buy it well below book value. Now that the stock is 44% higher, we need to ask ourselves if our investment thesis still holds.