Business Overview
Persimmon Plc (LON: PSN) is a well-known UK's leading housebuilders. It was founded in 1972. The company has 31 regional offices throughout the UK. The company headquarter is in York. Persimmon Homes, Charles Church and Westbury Partnerships are the three brands of the company. The company has around 5,000 employees.

Recent News
On 7^th November 2019, the company announced its third-quarter trading statement. This statement was for a period from 1 July 2019 to 6 November 2019.

Trading Statement
The company has delivered 2,100 new homes in the financial year to date. The company’s average weekly private sales reservation rate per site stood at c. 0.67, which was in line with the last fiscal year. The company is now entirely sold up for the current year and holds £950 million of forward sales reserved beyond 2019 against £987 million reserved in last year. Sales prices stood firm across the regional markets, and cancellation rate remained in line with the year-over period, at historically low levels.

Financial Highlights - H1 FY2019 (30^th June 2019, GBP, million)

(Source: Interim Report, Company Website)

In the first half of the financial year 2019, the company’s revenue declined to GBP 1,754 million as compared to GBP 1,835 million in the first half of the fiscal year 2018 due to the weak UK housing market during the period. The company sold 7,584 new homes in the first half of the fiscal year 2019. The average selling price of new homes was £216,942. The company’s total gross profit was GBP 555.5 million, and profit before tax was GBP 509.3 million. The company’s profit after tax was GBP 411.2 million. This decrease in profit was due to the company’s investment made in its customer care resources and processes, which has contributed to the reduction in gross housing margin.

Share Price Performance

Daily Chart as on 11^thDecember 2019, before the market closed (Source: Thomson Reuters)

On December 11^th, 2019, Persimmon Plc shares were trading at GBX 2,488 at the time of writing before the market close (at 8:30 AM GMT), down by 0.60 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 2,625/GBX 1802.50. The stock price is in up-trend and has given 34.5 per cent returns during the last year. In the last three months and one month, the company’s share price has moved up by 28.30 per cent and 6.2 per cent respectively.

Conclusion
The company’s revenue has declined during the first half of the financial year 2019. The company’s operating margin has also reduced to 31 per cent as compared to 31.8 per cent in the second half of the fiscal year 2018. Brexit could impact the operations of the company. Any deterioration in economic conditionscould affect the revenue of the company. Changes in government policies, laws, regulations, etc. could hamper the revenue and profitability of the company. Failure in managing labour and resources could affect the overall business of the company. The company’s outlook regarding the industry is positive. High levels of employment, lower interest rates and a competitive mortgage market could increase the housing demand, which would benefit the company. The company is expecting a seasonal increase in housing activity. The company is making an investment in its customer care resources and processes, which could place the business in a strong position. The company’s balance sheet is strong, and the company has good growth potential.

Based on the rationale as highlighted above, we have given a “Hold” recommendation at the current price of GBX 2,471 (as on 11^th December 2019, before the market close at 8.20 AM GMT).

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