Acquisition of high quality builder in Central Belt

Springfield has acquired the Scottish housebuilding business of Mactaggart & Mickel, extending its presence in the Central Belt and securing 17 new sites with planning in an area of significant demand. As a highly regarded housebuilder with a c.100 year heritage, Mactaggart & Mickel looks an excellent cultural and strategic fit. Total consideration is up to £46m, the majority of which will be paid in instalments as homes are completed. The acquisition is being funded through existing facilities

Forecasts up after ‘pay-as-you-go’ acquisition

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.

Positive H1 progress; well on track for full year

A confident set of interims from Springfield this morning confirms the Group is well on track to deliver another year of significant growth, in line with expectations. It was a record H1 for the Affordable division, reflecting delivery against its substantial contracted order book. The Private division, meanwhile, reported a decline in revenues versus the somewhat inflated H1’21 comp (COVID unlocking period) but enters H2 with a record order book for the remainder of the year. The Tulloch acquis

Acquisition of Tulloch Homes and £22m Placing

Springfield acquired Tulloch Homes on 1st December, its third acquisition since IPO, enhancing the Group’s presence in Inverness and the Highlands, one of the most attractive and fastest growing regions in Scotland. We upgrade our forecasts within this note for the acquisition and £22m placing, which was approved by yesterday’s General Meeting. Earnings accretion in FY23 is 13%, prudently with no acquisition synergies assumed. Springfield’s shares are trading at an 18% to 23% discount to peers,

Earnings-enhancing deal lifts Highlands growth

Scotland’s only quoted housebuilder, Springfield Properties, has acquired Highlands developer, Tulloch Homes, for an enterprise value of £56.4m – a premium of only 6% over pro-forma NAV. The group states that it will be earnings enhancing in the current financial year, and significantly so in FY2023E. We have upgraded our estimates accordingly. Tulloch strengthens Springfield’s presence in the economically vibrant region around Inverness. The consideration is to be part-funded by a £22m placing,

Prelims confirm outstanding FY21 performance

Springfield has delivered record results for FY21. Whilst the headline numbers were largely flagged in July’s trading update, we note the strategic progress that is being made (development of Villages, sustainability initiatives, ongoing investment in land pipeline). Profit growth (+81%) and cash generation (+£50m) are clear highlights, paving the way for a step change in the dividend (FY21 DPS 5.8p versus 4.0p forecast). We are forecasting underlying double digit profit growth throughout the fo

Rebound in market pays dividends

Scotland’s only quoted housebuilder has reported an 81% uplift to £18.5m in adjusted PBT for the full year to May 2021, beating our estimate of £18.0m, driven by high demand for the Group’s private and affordable homes. Net debt fell from £70.9m to £20.8m, again, moderately beating our estimate. A more substantial ‘beat’ was the dividend, totalling 5.75p, 28% ahead of our 4.5p forecast. We leave our P&L estimates for FY2022 - 23E broadly unchanged but increase our assumed dividends by 20% and 23

Impressive growth and cash generation

A positive year end update this morning confirms that Springfield will report record results for FY21. New revenue guidance of c.£215m (+49% on COVID impacted FY20) is comfortably ahead of our previous forecast (£200m), PBT will be in line with recently upgraded expectations (N1SE: £18m) and net debt of c.£21m is better than expected (N1SE: £24m), having reduced by a full £50m during the year. Springfield enters FY22 in excellent shape with strong growth potential (10% PBT CAGR forecast between

Debt continues to fall faster than forecast

Scotland’s only quoted housebuilder has confirmed in today’s trading update its previously raised profit estimates for the year to May 2021 and has again cut its year-end net debt guidance, following “an excellent” year, with significant growth in revenue in both the Private and Affordable Housing divisions. It is also preparing to further formalise its ESG commitment, with an identified Board lead and a strategy announcement to be made at the results in September.

Strong end to FY21 – PBT above pre-COVID levels

Springfield has confirmed a strong conclusion to FY21, with revenue and PBT expected to be ahead of previous expectations. This is the result of high demand across the business, particularly in private housing, which has been boosted further by land sales on two of Springfield’s larger developments. We upgrade our FY21 PBT forecast by 20% to £18m. This is well ahead of pre-COVID profitability (FY19: £16.5m), which we believe is the fastest recovery in the sector. We also factor in a significant

“Excellent” H2 sales drive FY2021E upgrades

We have raised our FY2021E PBT and EPS estimates by almost 20% and cut our net debt projections following an unscheduled trading update, which guided to profits “significantly ahead of market expectations”, driven by “excellent” private housing activity and land sales. At this point we are not changing our FY2022E and FY2023E P&L estimates but expect the risk is on the upside and will re-examine these following the scheduled update in July.

H1 results point to ‘significant’ full year growth

Scotland’s only quoted housebuilder has delivered a 43% jump in adj PBT for the six months to November, as the country emerged from its extended site lockdown, releasing cash on sales that had narrowly missed completing by the May 2020 year-end. The Group “remains on track to report significant growth for the full year, slightly ahead of market expectations”; we are maintaining our P&L estimates for now but believe that, in the absence of any unforeseen circumstances, the risk has moved more to

Strong bounce back and ongoing momentum

Springfield has reported a strong set of interims and ongoing momentum beyond the initial bounce back from COVID. Cash generation has been highly impressive (net debt more than halving during the period) and the interim dividend has been reinstated at 1.3p. The Group is said to be on track to report significant growth for the full year, slightly ahead of current market expectations. Springfield’s rating remains modest relative to sector peers and, in our view, the outlook for the Group is attrac

Strong trading and cash generation

Springfield has released a strong H1 update, confirming a continuation of recent momentum through the first half. This has been driven by the rebound in sales and build activity in private housing post lockdown. Cash generation has been excellent with net debt halving in six months to £34m at the end of November. A strong forward order book on both sides of the business underpins full year expectations, whilst the ongoing development of the Villages (including the recent planning consent for PRS

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We are not convinced

Reassuring update, given still low elasticities, and FY sales guidance increased. However, we continue to keep a cautious eye on the company for the next half given consumers’ changing habits which should become tougher in the coming weeks.

Well positioned in a tightening environment

Victoria has delivered record FY22 revenues and EBITDA, exceeding the minimum £970m and £155m indicated in April’s trading update. L4L revenue growth, against a Covid weakened comparative, was 19.2%, split equally between volume and price. Given the inflationary cost environment and supply chain constraints this is a highly creditable performance that demonstrates both pricing power and operational strength. The Group also made a number of enhancing acquisitions in FY22 (including the Rugs and U

Reassuring NGP beat

Another good report despite some caution regarding combustibles in the coming half. New Generation Products, which are currently the main driver, continue to do very well with the 2025 targets confirmed. This is the most important thing in our opinion.

Shoe Zone plc (SHOE LN) - Another FY22 upgrade

Better than expected demand and further strong margin performance leads to an upgrade in FY22E adjusted PBT from “no less than £8.5m” to “no less than £9.5m”. Zeus revenue forecasts increase by £1.5m (1.0%) to £157.4m and adjusted PBT forecasts (adjusted to exclude profit on the sale of freehold property and foreign exchange revaluations) increase by 12.0% to £9.5m.

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Solid Q2 22, Lysol normalization along expected lines

Reckitt reported estimate beating Q2/H1 22 numbers, with sales up 11.9%/8.6%, respectively, on a LFL basis, as strong momentum in Health and Nutrition was partially offset by a normalisation in Hygiene. The H1 adjusted operating margin expanded by 290bps, which is noteworthy within the context of an inflationary environment. Following the strong H1, Reckitt upgraded its FY22 guidance. We expect a mid-to-high single digit upgrade to our estimates.

Morning Note – 28 July 2022

Year-end update – positive demand set against margin pressures

James Halstead is a manufacturer and international distributor of commercial floor coverings. The group has this morning released a full year update, pointing to a continuation of the trends previously reported, in other words positive demand offset by margin pressures. Revenue in the year is reported to have moved 9-10% higher, which was set against the various logistical and inflationary challenges presented and management deliberately choosing to invest in stock to ensure demand can be met in

discoverIE - Record order book, pipeline of acquisition opportunities

In a positive Q1 update, discoverIE has detailed Q1 sales were up +27% on last year (+17% organically). The strong organic growth reported in FY 2022 has continued into this year and underlying earnings are ahead of the Board’s expectations. Orders were stronger than expected, with a book-to-bill of 1.09, and the order book at June 2022 was a record £240m, up from £224m at the start of the quarter. The order book is up +40% organically over the last 12 months. Gross margins continue to be resili

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H1 trading update – a solid performance

Sanderson Design Group has reported a resilient H1 trading performance for the six months to 31 July, with group sales up 1% on a reported basis. Strong performances were delivered by the Morris & Co brand, Licensing, and in the US market, all of which delivered superior margins. Adjusted underlying H1 profit before tax is expected to be in line with Board expectations, as is full-year trading currently, notwithstanding ongoing market and consumer uncertainties in an inflationary global environm

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