Springfield's interims highlight growth in revenue (+2%) and adjusted profit before tax (+8%), as well as a significant year on year reduction in net debt, a solid performance in the context of recent market uncertainty.
With signs of improving buyer confidence, full year expectations are reiterated, whilst the Group has made significant strategic progress, culminating in the recent agreement with SSEN Transmission. This is the first major deal with an infrastructure provider in the North of Scotland, where Springfield is uniquely positioned to support an expected doubling in housing demand over the next decade.
We believe Springfield is uniquely positioned to support the significant growth in housing demand anticipated in the North of Scotland, through the delivery of private and affordable housing, and now through a new build and lease model with infrastructure providers. We expect this to underpin the Group’s medium term growth plans, whilst the near-term outlook should be supported by improving consumer confidence, falling interest rates and the relative affordability of housing in Scotland.
Springfield’s shares have performed well over recent periods but remain attractively valued, in our view, trading on just 0.9x Price/ Book Value, lower than the sector average of 1.0x. Given the improving market dynamics and Springfield’s strong medium term growth outlook, we increase our Fair Value / share estimate to 170p (from 160p), equating to 1.2x Price/ Book.
