Springfield has confirmed a strong conclusion to FY19, in line with expectations. Scottish housing market conditions remain positive with good demand in both private and affordable/ social housing sectors. The year end update highlights strong sales rates, sustained prices and an improvement in gross margins in line with management’s targets. Good progress is being made on the Villages, notably at Dykes of Gray (Dundee) and Bertha Park (Perth). We make no changes to forecasts, which show Springfield growing faster than any of its peers, supported by a clear organic growth strategy, an annualised contribution from Walker Group in FY20 and a supportive market backdrop (particularly Edinburgh and Glasgow). Despite this, Springfield trades on a discount to peers on a P/E and P/B basis. In our view, a current year P/E rating of 7.3x undervalues Springfield’s growth prospects and unique positioning.
