(News Bulletin 247) – The real estate developer saw its reservations increase by 10% in volume in the first quarter, in a market that was nevertheless in decline. The group is not claiming victory but its action is progressing on the Paris Stock Exchange.

It’s no secret that the real estate market is in full recovery, due to high interest rates which are excluding many households from the market.

The difficulties of the promoter Nexity, whose stock has plunged 40% since the start of the year, perfectly illustrates this bad trend.

However, in this gloomy context, another developer listed on the Paris Stock Exchange seems to be doing well: Kaufman & Broad.

The company, once a resident of the SBF 120, delivered its results for the first quarter, a period which ended at the end of February.

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Declining results

Let’s quickly move on to the results themselves, which are penalized by an unfavorable base effect.

The turnover was divided by more than two to 228 million euros against 586.5 million euros. The company explains this plunge by the lesser contribution of the Austerlitz project.

This Kaufman & Broad project consists of a major real estate complex between the Austerlitz station in Paris and the Salpêtrière hospital, with housing, stores and even a hotel. Kaufman and Broad recognized 40% of the turnover linked to this project for its financial year ending at the end of November 2023 but only anticipates 10% recognition for the current financial year. The project is due to be delivered in 2027.

Otherwise, TP ICAP Midcap considers the results “solid”. Current operating profit certainly decreased, in line with the drop in revenue, to stand at 14.3 million euros compared to 34.7 million euros a year earlier. But the corresponding margin, at 7.4%, is completely in line with the group’s annual objective (between 7% and 7.5%), adds the research office. Margins are thus “always well under control”, argues TP ICAP Midcap. Net profit increased from 31.6 million euros to 11 million euros.

Reservations on the rise

The main highlight of the publication does not come from the results strictly speaking but from the commercial activity.

Kaufman & Broad reported an increase in its housing reservations, which can be compared to the group’s “orders” and therefore to its future sales, of 10% to 1,123 housing units in volume. In values, the progression is a bit less marked, at 7.9%.

This performance is significant since the market remains extremely degraded. According to estimates from Kaufman & Broad based on figures from the company Adabilité, booking volumes plunged by 53% for the entire market over the same period (i.e. from December to the end of February).

“This increase observed in the first quarter alone does not allow us to conclude that there is a recovery but to note the interest of buyers as soon as a suitable offer is offered to them,” underlined the group’s CEO, Nordine Hachemi, in a press release. .

“We attribute this outperformance to the group’s great responsiveness (reorientation of the offer towards block sales from the start of 2023) which, coupled with increased selectivity, allows it to display a sales lead time of its programs at just 4.1 months (compared to 6.9 months in the first quarter of 2023), compared to more than 20 months for the market,” explains Invest Securities.

For its part, TP ICAP Midcap evokes “a very good surprise”. “While it is obviously still too early to recognize the market recovery, this increase in reservations is a sign that the group’s commercial offering is already adapted to the new market conditions,” says the research office.

“Given the multiplication of the group’s commercial launches in this first quarter and with the prospect of the continued fall in rates, the recovery could be much clearer for the group by the second half in our opinion. The signal from this 1st quarter is in any case already very positive”, continues TP ICAP Midcap.

On the Paris Stock Exchange, the share price rose sharply, increasing by 5.2% around 10:10 a.m. to 29.2 euros.

Let us also highlight the strength of the company’s balance sheet, with net cash of 190 million euros at the end of February. “By its balance sheet, Kaufman & Broad is best placed to acquire failing competitors or their programs,” notes Invest Securities on this point.

TP ICAP Midcap confirmed its purchase advice and its price target of 36 euros considering that Kaufman & Broad is “one of the players most likely to emerge stronger from the current crisis”.