Helma Eigenheimbau - Increased focus on securing high margins
Helma’s FY17 results exhibit moderate growth (sales up 1.4% y-o-y) due to constrained capacity in the German construction market. However, demand remains strong for residential properties so the company is focusing on maximising margins and gradually utilising its extensive land bank. Management’s new guidance for FY18 is for pre-tax profit of €21.0-22.5m, which implies a 10-18% y-o-y increase. Given the limited visibility for top-line growth, some margin expansion versus FY17 may be required (which we explore in this note). Helma’s shares currently trade at a P/E ratio for FY18e of 10.0x, which is an 8% premium to the peer average.HELMA Eigenheimbau AG is a Germany-based company that specializes in design and construction of new private residential buildings and houses. The Company diversifies its activities into three business segments: building services business; property development business, and Other. The main area of operations of the building services business encompasses the planning and construction management of detached and semi-detached houses on the basis of customer orders. In the property development business, constructions are realized and marketed on the Company's own land. The Other business segment comprises the broking business for building-related financing and insurance. As of December 31, 2011, the Company had three wholly-owned subsidiaries: Hausbau Finanz GmbH, HELMA LUX SA, and HELMA Ferienimmobilien GmbH. It also held a 93.95-stake in HELMA Wohnungsbau GmbH.
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