Some may worry that the booming London housing market is starting to slow, but Telford Homes (TEF) provides the ideal tonic in its interim figures. The east London builder has the kind of forward earnings visibility other house builders would love to replicate. Most homes due to complete during the years to March 2015 and 2016 have already been sold, with significant numbers reserved for the two years beyond. This translates into a forward order book of more than £550m, from a development pipeline worth more than £1.1bn.
Open market completions fell from 222 to 140 for the half, but this is simply a reflection of the timing of current developments; completions are expected to accelerate in the second half. Operating margins rose from 17.1 to 18 per cent, but it's worth noting that selling expenses - around 4 per cent of the revenue from a typical development - are written off as incurred, well before revenue generated from forward sales is crystallised. In fact, higher sales prices at Avant-garde, the group's joint venture development in east London, pushed margins there above 40 per cent. The target margin when appraising new opportunities remains at 24 per cent.
Analysts at Shore Capital are forecasting full-year pre-tax profits of £23m and EPS of 30.3p (from £19.2m and 25.8p in 2013-14) rising to 40p next year.
| TELFORD HOMES (TEF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 359p | MARKET VALUE: | £214m | |
| TOUCH: | 355-359p | 12-MONTH HIGH: | 390p | LOW: 260p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 185p | NET DEBT: | 35% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 73.7 | 7.7 | 11.1 | 3.7 |
| 2014 | 65.1 | 9.4 | 12.6 | 5.1 |
| % change | -12 | +22 | +14 | +38 |
Ex-div:11 Dec Payment:09 Jan | ||||
