Upmarket property adviser Savills benefited from a surge in property transactions in the first half, against a very weak set of comparative numbers in 2009. But chief executive Jeremy Helsby doesn't expect this to continue and the flat dividend suggests his sobering outlook statement should be taken seriously.
As expected, the recovery was strongest in the Asia Pacific region - where Savills has a dominant position - with transaction fees more than doubling to £44.8m. But the UK market was also very buoyant, with income from commercial deals up 38 per cent and the residential business 44 per cent higher. They more than offset ongoing losses in continental Europe to pull the core estate agency unit back into profit after its £7.6m loss in the period last year.
Savills has been investing heavily in its less cyclical property management business, hiring extra sales teams in the UK and buying an Australian company called Incoll. That paid off, with revenues up 8 per cent to £114m - 37 per cent of the group total. Margins suffered as a result, but the more regular revenue streams will be helpful if the double dip in transaction volumes appears as expected.
Broker Numis expects full-year pre-tax profits of £33.6m and EPS of 18.7p (from £25.2m and 13.5p in 2009).
|ORD PRICE:||315p||MARKET VALUE:||£415.3m|
|TOUCH:||314.7-315.2p||12-MONTH HIGH:||385p||LOW: 268p|
|DIVIDEND YIELD:||2.9%||PE RATIO:||22|
|NET ASSET VALUE*:||137p||NET CASH:||£20.1m|
|Half-year to 30 Jun||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 22 Sep
Payment: 25 Oct
*Including intangible assets of £155m, or 117p per share
Savills is much more than a high-class London estate agent, with over half of sales now generated abroad, much of it recurring. But with the recovery set to stall in both Asia and the UK, the shares still look vulnerable. High Enough.
Last IC View: High Enough, 358p, 19 Mar 2010