Springfield Properties – this morning’s Interims show that this group is moving at quite a pace with hopes for its shares, now 98p, to climb to 122p or thereabouts, brokers TP 145p

17.02.2025

Good news always comes out faster than bad news!

Like the rest of the market, I was looking for the Scottish-based housebuilding and construction group Springfield Properties (LON:SPR) to announce its Interim Results for the six months to end-November 2024 tomorrow morning, as planned.

However, the group declared them this morning – they were good and better than expected.

The group also announced that its is selling 2,480 of its building plots to Barratt Redrow for £64.2m.

Together those two pieces of news should be positive enough to push the shares forward again.

The Business

Established way back in the 1990’s, then floated on AIM in 2017, Springfield Properties is one of Scotland’s leading home builders, focused on delivering quality private and affordable housing.

The Company operates through six brands: Springfield Properties, Springfield Partnerships, Dawn Homes, Walker Group, Tulloch Homes and Mactaggart & Mickel Homes.

With developments in key markets across Scotland, each brand offers something to the local communities in which they are active.

Its villages are standalone developments that include infrastructure and neighbourhood amenities.

Each village is designed to deliver approximately 3,000 homes, primarily for private sale, but also include affordable, and at Bertha Park, private rented sector housing, with green space and community facilities.

The Company has three villages that are underway and already home to communities: Dykes of Gray, Dundee; Bertha Park, Perth; and Elgin South (formally Linkwood Village), Elgin.

Interim Results

This morning's results for the six months to end-November 2024 reported a 13% reduction in group turnover to £105.6m (£121.7m) but showing a 90% improved adjusted pre-tax profit of £3.8m (£2.0m), with a 55% increase in earnings per share of 2.46p (1.59p).

CEO Innes Smith stated that:

"Trading for the first half of the year was in line with our expectations.

The strategic action taken in the previous year to reduce our debt, along with sustained cost control in the period and further profitable land sales, delivered a substantial reduction in our net bank debt compared with the prior year.

We also significantly improved our gross margin and achieved a strong increase in profit.  

While we are disappointed that some of our affordable housing projects were delayed due to uncertainty over availability of public funding, we are encouraged by the increase in activity in this area following the Scottish Budget in December.

The housing market continues to be influenced by the wider economy and subdued confidence resulted in a dip in reservation rates from mid-December. 

However, we are currently seeing an increase in visitor levels, bolstered by the reduction in interest rates earlier this month, giving us optimism that reservation rates will recover in the near term. 

We are pleased to have signed this profitable land sale agreement with Barratt, which demonstrates the value of our large, high-quality land bank.

The proceeds will accelerate the removal of our debt and support our strategic focus of capitalising on the unprecedented growth opportunity in the North of Scotland.

The requirement for new housing in the Highlands and Moray is substantial, driven by the need to house the increased population resulting from the incoming green infrastructure and the economic growth in the region.

With significant land holdings across the Highlands and Moray and an established presence, Springfield is uniquely placed to deliver on this increased demand for homes." 

The Equity

There are some 118,873,637 shares in issue.

The largest holder is Chairman Sandy Adam with 23.30%, while James Adam holds 7.92% and Anne Adam holds 5.92% of the equity.

Other large holders include BGF Investment Management (7.25%), SFM UK Management (5.51%), Janus Henderson Investors UK (5.17%), Canaccord Genuity Wealth (5.04%), JM Finn (1.34%), IG Markets (1.30%), KW Investment Management (0.93%), Citigroup Global Markets (0.87%), Hargreaves Lansdown Asset Management (0.63%) and Jarvis Investment Management (0.58%).

Analyst’s Views

At Progressive Research, the analyst Alastair Stewart, who first alerted me to the value of this company, has estimates out for £311.5m (£266.5m) in sales for the current year to end-May, with adjusted pre-tax profits of £20.8m (£10.6m), generating earnings of 12.8p (6.8p) and paying a dividend of 1.50p (1.00p) per share.

For the 2026 trading year, he goes for £262.0m in sales, £14.1m profits, with 8.7p earnings and a 2.50p dividend per share.

His estimates for the 2027 trading year are for £226.0m revenues, £14.9m profits, 9.2p earnings and 4.50p dividend per share.

Analyst Greg Poulton, at Singer Capital Markets, rates the group’s shares as a Buy, with a 145p Price Objective.

For the year to end-May 2025 he estimates revenues of £314.4m, with adjusted pre-tax profits of £20.9m, earnings of 12.7p and 1.5p per share in dividend.

For the 2026-year, he foresees £263.5m sales, £14.2m profits, 8.6p earnings and a 2.50p dividend.

Into 2027 his figures show £230.4m sales, £15.0m profits, 9.1p earnings and 4.50p per share in dividend.

Analysts James Tetley and Rachel Hayes, at Equity Development, have a ‘Fair Value’ of 150p on the shares.

They have sales estimates of £314.5m for this year, £21.0m profits, and 12.8p earnings, with a 1.5p dividend.

For 2026 they suggest £257.4m worth of sales, £14.0m profits, 8.5p earnings and a 2.5p dividend.

Their estimates for 2027 suggest £229.7m sales, £15.0m profits and 9.1p per share in dividend.

In My View

Having touched 112p last September, I believe that the shares of Springfield Properties are significantly undervalued at the current 98p, valuing the whole group at just £116.5m.

On the basis of the analyst estimates, I feel that they should be trading at closer to the range of 130p/140p, if not even higher.

However, I am now suggesting that its shares could soon rise to 122p, which offers at least a 25% upside.

However, I am now suggesting that its shares could soon rise to 122p, which offers at least a 25% upside.