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Dividend boost from Telford

Business is booming at Telford Homes, and the interim dividend has been increased by a hefty 85 per cent.
November 28, 2013

London focused house builder Telford Homes (TEF) ticked all the right boxes with its interim results, and shareholders were awarded with a hefty rise in the dividend. Moreover, chief executive Jon Di-Stefano expects the second half to bring a substantial increase in profits.

IC TIP: Buy at 374p

Slightly lower first-half turnover reflected the timing of completions which fell from 256 to 225. Even so, operating margins showed an impressive gain from 9.7 per cent at the March year-end to 13.2 per cent, underpinned by a combination of continued cost control and a 6 per cent increase in average selling prices to £373,000. Indeed, management reckons that operating margins for the full year are expected to be over 15 per cent. Telford also has impressive earnings visibility, with sales targets for the year to March 2014 already secured, while the group is 80 per cent sold for the following year and over 60 per cent for the year to March 2016. And the development pipeline grew 23 per cent to 2,790 properties.

Accordingly, analysts at Shore Capital have upgraded their forecasts, and now expect full-year pre-tax profit to double to £18m, giving adjusted EPS of 23.8p (from £9m/13.8p in 2013).

TELFORD HOMES (TEF)
ORD PRICE:374pMARKET VALUE:£216m
TOUCH:370-376p12-MONTH HIGH:390pLOW: 169p
DIVIDEND YIELD:1.8%PE RATIO:24
NET ASSET VALUE:166pNET CASH:£9.1m

Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201278.36.5310.22.00
201373.77.7411.13.70
% change-6+19+9+85

Ex-div:11 Dec

Payment:10 Jan