Telford Homes: Ahead of market expectations - Again!
Telford Homes is a residential developer operating across London and has just published a positive full year trading update (FY to 31 March 2017). The company continues to trade well and will report record revenues and profits when it announces results in late May, with PBT ahead of market expectations.Over the past six months the company has announced a further two major build to rent sales, at The Forge, E6 (to M&G) and New Garden Quarter, E15 (Folio London, a subsidiary of its JV partner), generating over £100m of sales combined. It has also announced a significant acquisition of the LEB Building, E2 for £30.2m in February.
Looking forward, the company says that it expects to exceed £40m PBT in FY 2018 and £50m PBT in FY 2019. Visibility is high with over 80% of anticipated gross profit for FY 2018 already secured, and over 60% secured for 2019. Total forward sales remain strong and the company will start the year with a considerable forward order book of c. £550m
The stock is only trading in line with the Housebuilding sector (on a PER of 10.3x) despite the attractive growth prospects and de-risked forward sales model. It also has a dividend yield of 3.9% rising to 4.3%. We would argue that the stock offers good value, particularly as build to rent sales could accelerate revenue recognition and offer potential upgrades later in the year.
Telford Homes is a developer of residential-led, mixed use sites in London. Co.'s customers include individual investors from the U.K. and overseas, owner-occupiers and housing associations. Co. is working with institutional investors in the build to rent sector. Co. has only one reportable segment being housebuilding in the U.K.
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