Developer’s shares building back to a nine-year high
Shares in regeneration specialist Harworth Group are now close to a nine-year high after a significant land sale suggested there “could yet be upside potential” in its portfolio.
Its share price has doubled in value since October 2020 as it climbed steadily over the 13-month period.
Shareholders have backed the developer’s recovery from the industry’s pandemic pressures and last night’s closing price of 177p is 15% higher than its peak before the first lockdown last year. It now has a market value of £570m.
Harworth Group’s shares closed up again on Monday after it revealed the sale of its Kellingley site for £54m, £20m above the site’s June valuation.
AJ Bell investment director Russ Mould told TheBusinessDesk.com: “March 2012 is the last time that Harworth’s shares traded above 180p apiece but the firm is moving back toward that mark after another sale that points to the value that lies within its portfolio of property assets.”
The Rotherham-based business has had a strong 2021, announcing in September a hextuple increase in its operating profit in the first half of the year when compared to pre-pandemic levels of 2019.
Lynda Shillaw
“Harworth, with our sizeable landbank, is uniquely positioned to take advantage of the structural tailwinds in our end markets, and our strategy has unlocked the potential to deliver more and grow the business.”
Following this latest sale Shillaw added that “the sale proceeds will be used to continue the build-out of our other development sites, including our consented industrial sites in Yorkshire” as the business looks to double in size over the next five to seven years.
Mould added:“The sale price will be particularly pleasing to shareholders for three reasons.
“First, Kellingley has raised £54m even though it is not in the list of ten largest sites by value in the last set of annual report and accounts.
“Second, the premium to the stated book value is a strong clue that there could yet be upside potential in the value of Harworth’s overall portfolio. The last stated net asset value (NAV) per share number is 183.2p, as per the 2021 first-half results, but there could yet be upside to that and therefore the share price, which currently trades almost at par with NAV.
“Third, the sale is a further affirmation of the company’s strategy.”
He concluded that the developer’s expertise which includes warehouses and industrial sites and residential property mean the business is “strategically well placed, especially if the pandemic persuades would-be house buyers to move from major metropolitan areas to more suburban ones”.
