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Savills bucks the trend

Fears of a slump in UK property transactions has so far been wide of the mark
March 15, 2018

Savills (SVS) is a lot more than an estate agent. In fact, while UK residential business revenue grew by 4 per cent in 2017, it was still only about 8 per cent of group turnover. Diversity remained the key to Savills’ continued progress, and underlying profit grew by 3.5 per cent to £140.5m.

IC TIP: Hold at 972p

Notable performances included Japan, where transactional volume jumped by 75 per cent, while commercial revenue for the Asia Pacific region as a whole grew by nearly a third to £168.4m.

The investment volume into UK commercial property in 2017 jumped by over a quarter to around £66bn, while Savills' revenue from commercial property transactions increased by 18 per cent to £101.6m. Consultancy, which includes planning and development work, generated a 12 per cent increase in revenue in the UK to £204.9m, while all parts of the Asia Pacific region performed strongly, more than doubling underlying profit.

Savills also has £14.6bn of assets under management, although profit here slipped from £17.6m to £13.3m, reflecting a decrease in disposal activity in German open-ended funds, and together with lower transactional activity in the US served to trim group underlying profit margins from 9.4 per cent to 8.8 per cent.

Analysts at Peel Hunt are forecasting adjusted pre-tax profit for the year to December 2018 of 145.5m and EPS of 70.8p (from £140.5m and 75.8p in 2017).

SAVILLS (SVS)   
ORD PRICE:972pMARKET VALUE:£1.38bn
TOUCH:971-972p12-MONTH HIGH:1,046pLOW: 823p
DIVIDEND YIELD:1.6%PE RATIO:17
NET ASSET VALUE:310p*NET CASH:£99m
Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)**
20130.9070.139.810.5
20141.0884.746.811
20151.2898.647.012
20161.4599.848.814.5
20171.6011258.815.1
% change+10+13+20+4
Ex-div:12 Apr   
Payment:14 May   

*Includes intangible assets of £386m, or 272p a share

**Excluding special dividends of 8,5p in 2013, 14p in 2015, 14.5p in 2016, and 15.1p in 2017