Bottom Line: Bryant's tough test

BETTER than expected interim figures from Bryant yesterday partly vindicated the recent buoyancy of the housebuilder's shares. Over the past three months they have outperformed the rest of the sector by 19 per cent and the market by a shade more.

A turnaround from loss to profit in the South and black ink from the other divisions were encouraging, as was the extent to which a move to bigger houses improved the average selling price.

But that trend disguised weak underlying house price inflation of perhaps only 2 per cent a year - a source of more concern than the stock market seems ready to admit.

Flat prices, coupled with optimistic land deals, will test the buying skills of the whole industry but especially Bryant, which is in the process of building up its northern and Scottish operations. Getting a decent margin on newly- acquired land in those parts poses a tough challenge.

As will keeping a lid on gearing in this, the most cash-hungry, stage of the cycle. The half-year figure of 3 per cent could rise to 25 per cent by the year end and 40 per cent next time if Bryant's target of a three-and-a-half-year land pipeline is maintained.

Forecast profits of pounds 30.5m in the year to May followed by pounds 39m in 1995 mean the shares, at 191p, are rated almost a third more highly than the rest of the market. With the sector about to absorb pounds 750m in new share issues from Beazer, Redrow and Wainhomes, that is high enough.

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