AIM-quoted housebuilder Telford Homes (TEF:AIM) may not operate at the top end of the market in London but even its so-called ‘non-prime’ focus is not enough to spare it from a weak housing market in the capital.
The shares are up 2.2% to 306p on today’s first half results having been struggled heading into these numbers.
The company’s take is that there is ‘work to do’ to hit its £50m profit target for the full year. House broker Shore Capital is rather more pragmatic, cutting its own forecast to £45.5m.
Looking at the first half numbers themselves, revenue is up 31% to £129.6m. Margins fall but this reflects a growing move into the build-to-rent sector.
BUILD-TO-RENT
This has been a strategic priority for the group. Although lower margin, because these projects are often pre-funded by institutional investors they enable the company to grow without taking excessive risk or needing additional equity capital.
Canaccord Genuity analyst Aynsley Lammin says: ‘Current trading remains difficult and uncertain given the political backdrop with the recent second 'off-plan' sales launch proving to be disappointing with only 15 sales achieved (over 40 would have been more of a successful outcome).
‘Achieving its targeted pre-tax profit of £50m for the current financial year looks unlikely given the current sales backdrop but it is difficult to call. It has 60 properties left to sell with 20 priced at over £600,000; it has £40m pre-tax profit secured at this point.’
