Telford Homes (TEF) delivered a robust performance for the six months to September, with work from the build-to-rent sector continuing to grow. August saw the London-focused builder hand over its first build-to-rent development, and two further schemes are nearing completion. There are also plans to build 894 homes in Nine Elms for Greystar, and obtain consent to build 700 homes on a site in East London in partnership with a major landowner. In total, the development pipeline for over 5,000 homes is worth £1.65bn.
Build-to-rent reduces risk because schemes are forward funded by the purchaser. Although this capital-light model increases the return on capital employed, margins are lower, but any resultant squeeze is largely ameliorated because the group is relieved of any planning or marketing costs. Telford is now looking to secure a long-term partnership with at least one large institutional investor.
Analysts at Peel Hunt are forecasting adjusted pre-tax profits for the year to March 2019 of £46m and EPS of 49.2p (from £46m and 49.4p in 2018).
| TELFORD HOMES (TEF) | ||||
| ORD PRICE: | 306p | MARKET VALUE: | £232m | |
| TOUCH: | 305-306p | 12-MONTH HIGH: | 475p | LOW: 296p |
| DIVIDEND YIELD: | 5.7% | PE RATIO: | 6 | |
| NET ASSET VALUE: | 311p | NET DEBT: | 52% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 99.3 | 8.84 | 9.4 | 8.0 |
| 2018 | 130 | 10.2 | 11.0 | 8.5 |
| % change | +30 | +15 | +17 | +6 |
| Ex-div: | 6 Dec | |||
| Payment: | 11 Jan |
