Time is not waiting, while Springfield is growing fast
Time Finance (LON:TIME) – capitalised at £15m and making £5m profits
This specialist finance provider is due to hold its AGM next Monday and could well make a positive Trading Update.
Its core strategy is to focus on providing the finance UK SMEs require to fund their businesses, to whom it offers a multi-product range including asset, loan, invoice and vehicle finance.
While primarily an 'own-book' lender the group operates a 'hybrid' lending and broking model enabling it to optimise business levels through market and economic cycles.
The group, which launched its medium-term strategic plan in June last year, had what would look like a treading water year to end May, with turnover down 2% at £23.6m and a 3% decrease in adjusted pre-tax profits at £3.0m.
However, I was encouraged to note the company’s announcement a week ago that its ‘own-book’ lending portfolio stood at a record £145.1m as at the end of September.
Now that is a very good signal which the market has yet to digest.
I recently spoke at length with Ed Rimmer, the group’s CEO, and came away impressed.
He is doing the right things currently and the balance of this current year to end May 2023 could see revenues lift to £25.0m or thereabouts, generating £3.5m profits and lifting earnings up to 3.0p per share.
The coming year is what we should be looking at more closely.
Andrew Renton, analyst at the group’s brokers Cenkos Securities, rates the shares as a Buy.
In his estimates he is going for £29.0m revenues next year, with a 43% jump in profits to £5.0m, worth 4.1p per share in earnings.
Considering that the company’s shares are trading at just 16.25p currently, I believe that they are an absolute steal.
My Target Price remains firmly intact – thereby offering an upside of 85% if achieved.
I hope that the group makes a positive AGM Trading Statement next Monday, if that happens then the upwards price recovery could just be getting underway.
Don’t miss this one – just think making £5.0m profits and only being capitalised at £15.0m – far too cheap.
(Profile 23.12.20 @ 21.5p set a Target Price of 30p*)
(Profile 07.01.22 @ 23.5p set a Target Price of 30p)
Springfield Properties (LON:SPR) – ahead of next week’s AGM I set a new Target Price of 120p
Established way back in 1956, this group is one of the leading housebuilding groups in Scotland.
In the year to end May it enjoyed a record number of 1242 completions delivering private, affordable and private rented sector housing.
The year saw a 19% rise in revenues to £257.1m (£216.7m) and a 12% improvement in adjusted pre-tax profits at £20.8m (£18.5m), lifting its adjusted earnings by 9% to 15.63p (14.41p), easily covering a 6.20p (5.75p) dividend per share.
The group has an expansion strategy that is working. In the last year it acquired two high quality housebuilders, Tulloch Homes and the housebuilding business of Mactaggart & Mickel.
The housing market in Scotland has remained strong and has enjoyed high demand.
Springfield has managed its way through the material and supply chain pressures, mitigate much of its impact.
The current year started with a strong order book in its private housing business, however it is facing a slowing of its affordable and PRS housing activity while awaiting decisions of the Scottish Government.
Analysts Greg Poulton and James Tetley at the group’s brokers Singer Capital Markets rate the shares as a Buy, with a price objective of 165p a share.
They are estimating the year to end May 2023 will see revenues reflecting the big acquisitions, rising to £359.1m with adjusted pre-tax profits of £33.0m, earnings of 18.5p and looking to pay a 7.30p dividend per share.
The group, which is Scotland’s only quoted housebuilder, will be holding its AGM next Monday, 31 October.
The company’s shares, which were up to 155p in January this year, are currently trading at around 92p and on a prospective 7.9% yield.
In my view that is far too low a rating level to be disregarded.
Accordingly, I now set a new Target Price for the shares to rise to 120p, even then they would be cheap for such a well-managed, expansive quality housing group.
(Profile 05.03.19 @ 114p set no Target Price)
(Asterisks * denote that Target Prices have been achieved since Profile publication)