Record result against inflationary backdrop
Springfield Properties, Scotland’s only quoted housebuilder, has delivered record FY22 results despite supply chain pressures, with homes completed rising 28%. Adjusted PBT rose 12% to £20.8m, 5% below our estimate mainly due to challenges in Affordable Housing (AH), while Private Housing continued to perform strongly. However, the Scottish government’s temporary freeze on rents will inevitably impact AH and Private Rental Sector (PRS) volumes, necessitating us to trim our PBT by 9% and 8%, respectively, for FY23E and FY24E. Despite this force majeure, we remain confident in Springfield’s longer-term outlook.
Record result against inflationary backdrop
Severfield, the UK’s top steel construction specialist, confirms in today’s AGM statement that performance in the first five months of FY23E has been strong and that trading is in line with management’s expectations. We are not changing our estimates but highlight what we believe to be major growth prospects in response to rapidly changing geopolitical and climate change priorities in the group’s markets in the UK, Europe and India.
Trading in-line, with booming order book
We have nudged up our FY22E adj PBT by 3.1% from £67.0m to £69.1m following “strong trading throughout” the first half in this morning’s interim results, which saw a 38% increase in adj PBT to £37.3m and a 45% rise in adj EPS to 13.5p. Both housebuilding and RMI (repair and maintenance) remained strong, the latter boosting demand for the high-margin London Brick range. Capacity was constrained but prices rose by c.30% in six months, supporting margins.
Estimates nudged up after strong interims
We have raised our FY2023E and FY2024E PBT estimates for Scotland’s only quoted housebuilder by 5% and 10%, respectively, following its £46m acquisition of the housebuilding business of Mactaggart & Mickel Group. The deal is structured with payments phased over five years in line with homes sold, so we are not changing our net debt estimates. Springfield also reiterated guidance for FY2022E, with improved net debt.
Forecasts up after ‘pay-as-you-go’ acquisition
Severfield, Britain’s leading structural steel specialist, delivered an 11% increase in adjusted FY2022 PBT to £27.1m, just below our estimate despite “challenging market conditions” as steel price increases temporarily diluted margins. However, the group reiterated its guidance for FY2023E and we are maintaining our PBT estimates for the current financial year and next. We are also introducing a new forecast of further growth into FY2025E. This is driven by a range of long-term growth sectors, which we highlight.
Resilient FY result with forecasts maintained
We have raised our FY2022E PBT by 11% from £60.2m to £67.0m following yesterday’s AGM trading update, which reports strong trading in the first four months, ahead of management’s expectations. Revenue for the period was 25% ahead of last year, driven by a 6% increase in brick volumes and a second price rise. Statements from the leading housebuilders highlight the strong demand for materials, while low inventories support pricing power.
Strong demand and pricing fuel upgrades
Residential-for-rent developer and manager Watkin Jones has confirmed it is on track to meet FY2022E expectations of rising profits in today’s interim results, which showed an 8% rise in revenue and a temporary decline in adjusted PBT, reflecting previously signalled timing and mix of sales. We are maintaining our estimates for FY2022E-23E, which show 21% compound growth in PBT. Longer term, we expect further growth fuelled by increasing demand for rental property from tenants and international investors.
On track for FY forecasts driven by rush to rent
Severfield, Britain’s leading structural steel specialist, has confirmed that it expects FY2022E results in line with its previous expectations. We are maintaining our profit estimates for FY2022E-24E but raise our revenues to reflect steel cost increases, which are passed onto customers. The outlook is underpinned by record orders, amid “significant opportunities” including ‘giga-factories’, data centres and nuclear. The UK’s 7 April Energy Security Strategy, prompted by Russia’s invasion of Ukraine, puts new nuclear at the heart of plans to reduce dependence on foreign energy. We believe this and wider green and economic security issues should support long-term growth.
Orders surge as nuclear market reopens
Residential-for-rent developer and manager Watkin Jones confirms in today’s trading statement for the six months to 31 March that it remains confident in its performance for FY2022E, stating that there will be more of a second-half weighting due to weighting of project deliveries. We maintain our estimates for both FY2022E and FY2023E, and also highlight growing investor demand for the group’s student and build-to-rent developments.
FY outlook confirmed with growing pipeline
Brick and concrete products manufacturer Forterra has delivered FY2021 results slightly ahead of our and market expectations, with a 27% rise in revenue to £370m and an 86% increase in adjusted EBITDA to £70.4m (vs our £67.5m). The FY2021 dividend of 9.9p was also ahead of our forecast of 9.2p, supported by net cash of £41m. FY2022E has started well, with market conditions “remaining highly supportive” amid continuing demand for housing and construction. We introduce FY2022E forecasts that assume further growth, to be accelerated by the new Desford plant.
FY results ‘beat’ with ambitious growth plans
Scotland’s only quoted housebuilder, Springfield Properties, has reiterated its FY2022E guidance in its interim results, supporting our estimates for FY2022E-24E, which we increased in December following the Tulloch Homes acquisition. The latest results show a sales record for Affordable Housing and the first private rental sector revenue, further diversifying the group’s revenue streams. The interim dividend was lifted from 1.3p to 1.5p – in our view underscoring the Board’s confidence in the FY outturn.
FY guidance reiterated in HY results
Brick and concrete products manufacturer Forterra has confirmed it expects FY2021E results to be in line with its expectations, as strong trading continued in Q4, with better-than-expected cashflow. Pre-IFRS 16 net cash of c.£40m is ahead of management expectations and our forecast of £24m. This has allowed the company to launch a £40m share buyback programme. Other than lifting net cash, our estimates are unchanged. Our adjusted FY2021E PBT estimate of £48.8m translates to a PER of 14.5x. We believe Forterra’s ongoing performance should be underpinned by housebuilding volumes and pricing power offsetting input cost inflation.