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The Property Franchise Group boosted by housing market buzz

The lettings and estate agency franchising group has increased its exposure to the booming residential sales market via its purchase of Hunters
The Property Franchise Group boosted by housing market buzz
  • Adjusted cash profits come in ahead of expectations for 2020
  • Shareholders paid a 6.6p dividend following acquisition of Hunters

A booming house sales market drove the recovery in adjusted cash profits for The Property Franchise Group (TPFG), which were up 8 per cent last year and ahead of expectations. 

However, the acquisition of residential sales-focused Hunters in March has increased the group’s exposure to the fortunes of the housing market. That could prove fortuitous for earnings this year based upon the continuing surge in activity across the market during the first quarter. The pipeline of sales agreed at the end of March was up 45 per cent on the prior year. 

With the accretive benefit to earnings from the acquisition in mind, house broker Cenkos forecasts adjusted EPS of 22.4p this year, rising to 22.9p in 2022. That leaves the shares trading at 10 times forward earnings, broadly in line with the five-year average. Given the uncertainty around how long the housing market buzz will be sustained, that leaves them looking fairly valued. 

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THE PROPERTY FRANCHISE GROUP (TPFG)  
ORD PRICE:220pMARKET VALUE:£69m
TOUCH:214-222p12-MONTH HIGH:240pLOW: 150p
DIVIDEND YIELD:4.0%PE RATIO:15
NET ASSET VALUE:66p*NET CASH:£7.9m
Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20168.33.213.06.5
201710.24.314.27.5
201810.14.313.38.4
201911.44.012.52.6
202011.54.814.68.7
% change+1+20+17+235
Ex-div:**   
Payment:**   
*Includes intangible assets of £14.3m, or 46p a share **Dividend of 6.6p paid on 23 February following Hunters acquisition