The bears in the housebuilding sector will struggle to find much to support their scepticism in interim figures from east London focused Telford Homes (TEF). Turnover, profits and earnings per share all more than doubled in the six months to September, and there is no sign of the insatiable demand for properties close to central London abating.
Telford's secured forward order book of over £700m is more than four times total revenue reported in the year to March 2015. The order book also helps to boost cash flow, because Telford takes a 10 per cent deposit on each sale, followed by a further 10 per cent a year later when exchange of contracts takes place more than two years ahead of completion.
Chief executive John Di-Stefano pointed out that sales price inflation had slowed to around 5 per cent, as had build cost inflation - both pointing towards a more sustainable trend. On the recent imposition of extra stamp duty on buy-to-let investors, who buy about half of Telford's homes, Mr Di-Stefano suggested that strong tenant demand is likely to sustain demand from investors, too. He also hinted that institutional investors, who are likely to be exempt from the extra tax, may become more important to Telford.
Analysts at Peel Hunt expect full-year adjusted pre-tax profit of £30.5m and EPS of 36.5p (from £25.1m and 32.6p in FY2015).
| TELFORD HOMES (TEF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 388.5p | MARKET VALUE: | £290m | |
| TOUCH: | 387.25-389p | 12-MONTH HIGH: | 495p | LOW: 337p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 181p | NET DEBT: | 38% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 65 | 9.4 | 12.6 | 5.1 |
| 2015 | 140 | 21.0 | 28.0 | 6.5 |
| % change | +115 | +123 | +122 | +27 |
Ex-div: 10 Dec Payment: 8 Jan | ||||
