This is despite the fact that Ben Habib, chief executive of First Property, noted at the time that “the markets in which we operate are generally buoyant and offer interesting investment opportunities which we hope to capitalise on". Moreover, having made a number of earnings accretive acquisitions during the financial year to end March 2016, all of which “have yielded income at or above our expectations at the time of their purchase and are, without exception, valued at levels exceeding their acquisition prices,” the company now has a high recurring revenue stream that fully underpins analysts’ earnings expectations for the year ahead. Chris Thomas at broker Arden Partners expects First Property to generate revenues of £20m in the financial year to end March 2017, recurring pre-tax profits of £6.9m and EPS of 4.6p. On that basis, the shares are rated on less than 9 times earnings estimates and offer a prospective dividend yield of 3.8 per cent based on the payout per share being lifted to 1.53p.
And there is no doubt the forthcoming results will make good reading. The company’s adjusted net asset value per share was 40.3p at the end of September 2015, up from 35.75p at the end of March 2015, and there is a decent prospect of another valuation uplift in the second half to end March 2016. There will also be a favourable currency benefit on translation of the value of its overseas property holdings into sterling given that the sterling/euro exchange rate has weakened from £1:€1.357 to £1:€1.262 between the end of September 2015 and the March 2016 financial year-end during which time the Polish Zloty/Euro exchange rate has been stable at around PLN 4.1-4.3, as it has been for several years. The headline profit numbers will be impressive as analysts predict First Property will report pre-tax profits of £7.4m in the 12 months to end March 2016 to produce EPS of 5p and a dividend of 1.48p. Admittedly, this includes some mandates that have now ended as expected and one-off credits too, which is why I am using the lower recurring profit figures for the current financial year when making a valuation.