Maiden interim results from McCarthy & Stone, the retirement housebuilder, look strong but it will be hard to live up to expectations.

Revenue rose 33% to £250m in the first half with legal completions up 19% to 923 and average selling prices up 12% to £253k. Underlying PBT rose 23% to £39m. New regional offices and operational infrastructure caused the deleveraging but this cost growth won't repeat in the second half. 10,800 plots are in the land bank with 1,700 plots added in the first half. The outlook for the second half looks good with the order book up 26% through 15th April.

Management are targeting 3,000 completions per year, up 62% from the current annualised rate. Unlike peers, management are actually investing in land at a fast enough rate to hit this target in theory. The deleveraging of costs is disappointing but costs are not wildly out of line against peers. Given management's growth plans, this level of investment in cost looks reasonable.

Where it all comes apart, as always with this sector, is valuation. To see that housebuilders are valued incorrectly, you usually need a spreadsheet. To see that McCarthy & Stone is valued incorrectly, you just need to look at other housebuilders.

Bovis sells ~4,000 houses per year, 33% more than McCarthy & Stone have planned in the future. Bovis' ASP is 8% lower, I also suspect that future ASP growth will be slower too, but this is offset by what I suspect will be lower costs. McCarthy & Stone turns inventory a little faster, they probably get more off-plan buyers, but the gap isn't huge. Certainly not large enough, to explain why Bovis' market cap is 15% lower

(One counter-argument is that if Bovis is also very cheap then McCarthy & Stone could be cheap too...this isn't the case, Bovis is over-valued in absolute terms).

McCarthy & Stone has attracted this premium valuation by convincing investors that it is tapping into a theme: the UK's ageing population. What does this actually mean though?

The algebra here is odd: I put up a block of flats and I market it exclusively at a subset of the total population. Something mysterious happens in the middle and I end up with a more valuable stream of revenue than if I marketed it at the whole population. Targeting a profitable, under-served subset of the market makes sense but it doesn't work if the product you sell is…

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