A booming market for rented homes helped buy-to-let specialist Paragon (PAG) beat brokers' expectations for first-half earnings. With the size of the market still "materially below" its pre-crisis peak, chief executive Nigel Terrington is expecting more growth ahead, too.
Robust demand from private landlords lifted advances of buy-to-let loans to £269m - up from just £102m the year before - and the loan pipeline of over £348m at the end of the period suggests impressive second-half prospects. With £550m of warehouse loan facilities, Paragon looks well-placed to fund its growth. Meanwhile, the proportion of buy-to-let loans in arrears fell to a tiny 0.3 per cent of the book, from 0.4 per cent a year earlier. That easily beat the sector average of 0.95 per cent.
Paragon isn't just a buy-to-let play, though. Its Idem business is growing fast by acquiring consumer loan books from banks; profits in the unit grew 39 per cent to £21.2m. Paragon also received a licence for its banking unit in February. That has made a start in motor finance and its ability to take retail deposits could eventually provide an important further source of funding.
Broker Jefferies expects full-year adjusted EPS of 31.4p (28.4p in 2013).
PARAGON GROUP OF COMPANIES (PAG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 374p | MARKET VALUE: | £1.15bn | |
| TOUCH: | 374-375p | 12-MONTH HIGH: | 426p | LOW: 282p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 297p | |||
| Half-year to 31 Mar | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|
| 2013 | 48.8 | 12.6 | 2.4 |
| 2014 | 58.2 | 15 | 3 |
| % change | +19 | +19 | +25 |
Ex-div: 2 Jul Payment: 25 Jul | |||
