East London housebuilder Telford Homes (TEF) has been flogging flats at a prodigious rate. The company exchanged contracts to sell 803 units in the financial year to 31 March - up from 460 the previous year - even though it only built 374 homes in the period. For the first time in years, none of its completed homes remain unsold, and it has even pre-sold 99 per cent of the flats it expects to finish in the current financial year.
Much of the demand is from overseas - 39 per cent of those 803 homes were bought by foreign investors. Yet chief executive Jon Di-Stefano also stresses the company's success with domestic investors (28 per cent) and owner-occupiers (33 per cent), who typically buy later in the development process. The company has not yet signed up to any of the government schemes for buyers with minimal deposits (NewBuy and Help to Buy), which could provide a further boost in the coming years.
The sheer volume of demand is putting inevitable upward pressure on prices, which the company estimates rose about 5 per cent last year in its core inner-city locations. As a result, the gross margin rose from 17.6 to 24.3 per cent, with further gains expected as pre-sales feed through to the bottom line.
Following upgrades, house broker Shore Capital now expects pre-tax profits of £15m this year, giving EPS of 22.5p.
TELFORD HOMES (TEL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 270p | MARKET VALUE: | £136m | |
| TOUCH: | 268-272p | 12-MONTH HIGH: | 281p | LOW: 100p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 145p | NET DEBT: | 47% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 107 | 4.30 | 8.1 | nil |
| 2010 | 159 | 7.34 | 13.7 | 2.0 |
| 2011 | 121 | 3.03 | 4.8 | 2.5 |
| 2012 | 124 | 3.05 | 4.7 | 3.0 |
| 2013 | 142 | 9.04 | 14.3 | 4.8 |
| % change | +15 | +197 | +204 | +60 |
Ex-div: 19 Jun Payment: 19 Jul | ||||
