Telford Homes (TEF), the east-London focused housebuilder, delivered another solid performance in the six months to September. Although headline profit was a little lower, this reflected the timing of developments rather than overall progress. This effect should lessen as revenue from 'build to rent' increases, because profits from the latter are recognised through the building programme rather than at the end. Telford remains on track to make over £40m pre-tax profit for the year to March 2018.
Earnings visibility remained strong, with 95 per cent of gross profits secured for the current year and 65 per cent for the following year to March 2019. Forward sales total £580m, and the development pipeline is worth over £1.4bn on just under 4,200 homes.
Build-to-rent activity continued to grow, and, as well as the three developments currently under construction, a pre-construction agreement was signed with rental housing operator Greystar to develop just under 900 homes in Battersea. Margins here are slightly lower than open market sales, but everything is forward funded, and Telford doesn’t have to use its own capital. In addition, cost efficiencies helped to lift build to rent margins to 17.5 per cent, well above the 12-13 per cent target.
Analysts at Peel Hunt are forecasting adjusted pre-tax profit for the year to March 2018 of £44m and EPS of 47.1p (from £34.1m and 36.6p in 2017)
| TELFORD HOMES (TEF) | ||||
| ORD PRICE: | 414p | MARKET VALUE: | £312m | |
| TOUCH: | 413.5-415p | 12-MONTH HIGH: | 440p | LOW: 305p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 274p | NET DEBT: | 29% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 104 | 9.3 | 9.9 | 7.2 |
| 2017 | 99 | 8.8 | 9.4 | 8 |
| % change | -5 | -5 | -5 | +11 |
| Ex-div: | 14 Dec | |||
| Payment: | 12 Jan |
