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Orders still outstrip revenues at Telford

The London-focused developer continues to build scale in response to the capital's changing demographic
May 30, 2018

Full-year returns for Telford Homes (TEF) suggest there’s nothing unrealistic in the company's assertion that it’s “well placed to exceed £50m of total pre-tax profit” for FY2019. As the housebuilder points out, this would represent “a 100 per cent increase over four years”, even if the price of growth has been a swell in net debt to £103m, up from £13.2m a year earlier. But, backed by a new five-year £210m revolving credit facility, there’s no sign the London-focused group is pulling in its horns.

IC TIP: Hold at 458.5p

Why would it? The capital’s top-tier property market might be feeling the pinch, and house price growth has eased relative to other regions in the UK, but the general structural drivers remain in place. Management notes strengthening demand from build-to-rent investors, owner-occupiers and housing associations, albeit at “more affordable price points”.

With a pipeline of more than 4,000 units in place, Telford exited its financial year with £344m in forward-sold properties, a 37 per cent decline on the prior year, although it should be noted that several significant build-to-rent transactions were struck at the tail-end of FY2017. Plus the March 2018 figure still exceeded recognised revenues.

Peel Hunt expects adjusted pre-tax profits of £52m and EPS of 55.6p for the current financial year, against £46m and 49.4p in FY2018.

TELFORD HOMES (TEF)  
ORD PRICE:458.5pMARKET VALUE:£346m
TOUCH:458.5-460p12-MONTH HIGH:475pLOW: 362p
DIVIDEND YIELD:3.7%PE RATIO:10
NET ASSET VALUE:306pNET DEBT:45%
Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201414119.226.48.8
201517325.133.211.1
201624632.239.314.2
201729234.636.815.7
201831646.349.817.0
% change+8+34+35+8
Ex-div:07 Jun   
Payment:20 Jul