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Telford takes off

RESULTS: Telford Homes has a four-year sales pipeline for the first time
May 28, 2014

With a forward order book stretching out four years, London-based house builder Telford Homes (TEF) now has a development pipeline worth over £875m. That’s up 40 per cent from the previous year, and serves as an illustration of the insatiable demand for apartments and houses close to central London. Further evidence, if needed, came with news that of the 157 apartments in the Stratford Central development, 148 were sold off-plan in four weeks. The development is not expected to complete until March 2018.

IC TIP: Buy at 295p

Such bubbling demand has transformed the financial metrics. Operating margins have nearly doubled to 17.1 per cent, and gearing has fallen from 47.3 per cent to zero. Pre-tax profits have risen sixfold in the last two years and are expected to more than double again over the next four.

Contracts were exchanged on 515 finished properties, up from 492, and 98 per cent of the current year’s targeted output has already been sold. Of these, 35 per cent were sold to owner occupiers, a third to UK-based investors and 32 per cent to overseas investors. The average open-market selling price rose from £353,000 to £400,000.

Analysts at Shore Capital are forecasting pre-tax profits of £23m for the current year and EPS of 30.3p.

TELFORD HOMES (TEF)
ORD PRICE:295pMARKET VALUE:£175m
TOUCH:295-299p12-MONTH HIGH:390pLOW: 249p
DIVIDEND YIELD:3.0%PE RATIO:11
NET ASSET VALUE:177pNET CASH:£4.8m

Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20101597.313.72
20111213.04.82.5
20121243.14.73
20131429.014.34.8
201414119.226.48.8
% change-1+113+85+83

Ex-div: 25 Jun

Payment: 18 Jul