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Housing revival boosts LSL

RESULTS: LSL Property Services is riding the recovery wave in the housing market.
March 10, 2014

The gathering pace of recovery in the housing market has worked wonders for LSL Property Services (LSL). The estate agency division delivered the star performance, with a 19 per cent increase in operating profits to £29.1m.

IC TIP: Buy at 476p

Residential sales income, excluding London specialist Marsh & Parsons, grew by 10 per cent to £64.1m. And while the rate of expansion in the lettings market slowed a little, income still rose by 9 per cent to £39.2m. The capital's housing market has been much stronger, but a scarcity of properties on the market restricted income growth at Marsh & Parsons to 10 per cent, while the cost burden of new branch openings pushed the London agent's operating profits down 7 per cent to £6.7m.

The surveying side is still nursing the wounds inflicted by Lloyds taking its valuation operation in-house, and transaction volumes in the first quarter dipped by 11 per cent year-on-year. However, trading conditions improved as the year progressed, and after falling 2 per cent in the first half, revenue jumped by 15 per cent in the second. Professional indemnity claims remain a worry, and provisions rose by a further £12m.

Analysts at Numis Securities have upgraded their forecasts for the coming year and now expect underlying pre-tax profits of £42.4m and EPS of 31.9p (from £34m and 25.3p in 2013).

LSL PROPERTY SERVICES (LSL)
ORD PRICE:476pMARKET VALUE:£496m
TOUCH:476-477p12-MONTH HIGH:491pLOW: 299p
DIVIDEND YIELD:2.2%PE RATIO:35
NET ASSET VALUE:95p*NET DEBT:26%

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200915816.611.45.4
201020736.033.68.4
201121817.612.98.7
20122446.76.89.5
201325917.113.610.5
% change+6+155+100+11

Ex-div: 26 Mar

Payment: 29 Apr

*Includes intangible assets of £145m, or 139p a share