Harworth Group – Yesterday’s Finals Trading Update for 2024 show the potential of the ‘brownfield’ developer, with its shares now 169.50p against Target Price of 200p

29.01.2025

Yesterday morning’s Trading Update from the Harworth Group (LON:HWG) reported a strong demand for its building plots from a multitude of house developers.

The group is a leading UK sustainable regenerator of land and property for development and investment which owns, develops and manages a portfolio of over 14,000 acres of land on over 100 sites located throughout the North of England and Midlands.

It specialises in the regeneration of large, complex sites, in particular former industrial sites, into new Industrial & Logistics and Residential developments to create sustainable places where people want to live and work, supporting new homes, jobs and communities across the regions.

At the same time its aim is to deliver long-term value for all stakeholders.

Issued ahead of the group declaring its Final Results on Tuesday 18th March, the 2024 Trading Update showing strong operational performance and land sales, which in turn helped to drive the growth of its net development value.

In the year, the group declared that it had completed a record of Residential sales of 2,385 plots, concluding 13 transactions with a headline sales value of £104.1m.

That compared with its target of 2,000 plot sales on average per year.

The year’s sales also included 4.4m sq. ft. of Industrial & Logistics land for a headline sales value of £230.1m, evidencing the continued strong demand for Harworth's high quality land products.

Alongside the Update, CEO Lynda Shillaw stated that:

"2024 has been a record year for Harworth operationally and, as we enter 2025, we remain confident in our ability to reach our £1bn EPRA NDV target by the end of 2027.

We have an extensive platform to scale the business, owning and controlling a sizeable land pipeline capable of delivering 33.6m sq. ft. of Industrial & Logistics space and 31,264 new homes, and we remain well positioned in structurally undersupplied sectors that are fundamental to the UK's economic growth.

With low debt and high available liquidity, we are well placed to take advantage of opportunities whilst remaining resilient through the near-term macro-economic uncertainty.

The consistency of Harworth's performance over time continues to highlight the agility and resilient nature of our business model, and our team's expertise in identifying and driving significant latent value from the portfolio.

We continue to make solid progress in delivering our strategy and are confident in our ability to continue to drive both strong returns and long-term value from our landbank and development activities."

Analyst Views

At Panmure Liberum, its analysts Bjorn Zietsman and Tim Leckie reiterated their Buy stance on the group’s shares following the Trading Statement.

They have a 200p Target Price set on the stock, which is around a 20% discount to their two-year forward EPRA NDV forecast.

The analysts consider that the market is not attributing enough credit to the value creation demonstrated by HWG’s model even through difficult economic conditions.

They continue to see material upside to HWG’s equity value over time as it progresses its large pipeline of land, achieving substantial gains from planning, land preparation and development.

For the 2024 Year to end-December they estimate that the group net asset value per share will have risen from 205.4p to 220.1p.

For this year they look for 230.5p, then progressing up to 245.6p per share in 2026.

In My View

I was pleased to see this positive Trading Update and I look forward to delving deeper into the group’s performance come the publishing of its 2024 Final Results on Tuesday 18th March.

In the meantime, I take the view that this group’s shares are excellent value at the current 169.50p, at which it is capitalised at only £550m.