BUZZ-McCarthy & Stone: record low on modest growth expectations

** Britain's biggest builder of homes for retirees McCarthy & Stone -3.6 pct, having earlier sunk to an all-time low (listed Nov 2015)

** H1 underlying oper profit 40 pct lower at 14.5 mln stg, in-line with Jefferies and Peel Hunt expectations

** Builder says it expects modest growth in the next 2 yrs, citing hit by a government proposal to set ground rents. Co also feeling the pinch of a pause in build start activity after the Brexit vote

** Britain proposed that builders be banned from selling leasehold homes in England and ground rents on flats could be cut to zero. Anyone who owns a long lease on a property in England and Wales will typically have to pay rent to the freeholder or landlord of the property, known as ground rent

** For McCarthy, uncertainty surrounding ground rents has meant much lengthier land negotiations, which means there are fewer sites coming through the land pipeline than planned, Peel Hunt says

** Peel Hunt cuts PBT forecasts by 7-9% to £120m and £143m for FY19-20

** "Shares (Berlin: DI6.BE - news) have continued to struggle in 2018, with a 14% fall ytd date vs a 9% drop for the sector on average. The soft second-hand market combined with the ongoing uncertainty about the leasehold/ground rent issue continue to take their toll," Peel Hunt analysts say

** "Currently investors cannot see past McCarthy's Ground Rent Day, but we see significant upside for the price of McCarthy's shares once it leaves Ground Rent Day behind," Jefferies analysts say

** Stock near bottom of FTSE Midcap Index