Bovis float likely to sink

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The Independent Online
Shares in Bovis Homes, the housebuilder that P&O is selling off, are unlikely to be priced at much more than 240p each this week, according to City analysts.

The price of Bovis, shares in which are being sold to institutions, will be set on Wednesday with full stock market trading beginning on December 11.

With 100 million shares in issue P&O would net pounds 240m from the sale of what is the UK's tenth largest housebuilder.

That sum is considerably below the pounds 300m figure first discussed when the shipping group first proposed selling its housebuilding division in March 1996.

A price of 240p a share is also less than more recent hopes of 260p, though lead manager NatWest Securities, whose own sale to Bankers Trust is expected on Tuesday, is likely to feel it will have done a good selling job given the recent uncertainty in the stock market.

"The company has missed the boat a bit," said Simon Brown, analyst at Williams de Broe. "It would have done better to have gone in the first quarter when house prices were rising reasonably well and before interest rates started to move up."

At 240p a share Bovis, which has forecast 1997 pre-tax profits of just over pounds 37m, would be selling on a multiple of just under 10 times prospective earnings, compared with a sector average of around 11 times earnings.

"The company is going to be hard pushed to sell its shares for much more than 10 times likely earnings," said Mr Brown, who points out that shares in rival housebuilder Persimmon appear cheaper selling for around eight times prospective earnings.

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