Property consultant and upmarket estate agency Savills has returned to profitability at its half-year results, following full-year losses of £7.7m last year caused by the tough property market.
The collapse of commercial property investment markets, where valuable fee income is generated, means the transactional side of Savills' business posted an underlying loss of £7.6m, equivalent to a breathtaking fall from the £2.5m profit posted in the first half of 2008. However, income from commercial property management, the group's operations in Asia and a recovery in the London housing market have all helped to make up ground.
"There is a huge weight of money in the commercial property investment market, but they're all chasing the same stuff - quality buildings let on long leases to a good covenant," says chief executive Jeremy Helsby. "However, prime is a very small part of the market. Once you get out of that, there's almost no market. Secondary buildings are not saleable because you can't get the debt."
|ORD PRICE:||344p||MARKET VALUE:||£453.5m|
|TOUCH:||342-344p||12-MONTH HIGH:||385p||LOW: 188p|
|DIVIDEND YIELD:||1.7%||PE RATIO:||na|
|NET ASSET VALUE:||139p*||NET DEBT:||0.20%|
|Half-year to 30 Jun||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 23 Sep
Payment: 28 Oct
*Includes intangibles of £148m, or 112p a share
Still, Savills stands in good stead in relation to its peers, notably which posted full-year pre-tax losses of £80m in July, and heavily indebted US rivals Jones Lang LaSalle and CB Richard Ellis. By contrast, Savills has net debt of just £400,000 and available banking facilities of some £70m.
Broker Oriel Securities has trimmed its adjusted full-year pre-tax profit estimate by £1m to £17m, giving adjusted EPS of 9.7p (2008: £22m/17.5p).
Savills lives up to its 'lean and mean' reputation, but the continued slump in transactional markets means its shares are as expensive as the luxury London pads on its books. High enough.
Last IC view: High enough,238p, 11 Mar 2009.