In the next six months, Humberts could become the biggest mid-market estate agent outside London, and chief executive Max Ziff is planning ‘total domination’ of his target market within five years.

The group reversed into AIM-listed Farley Group in late 2005 and Ziff, a former managing director of UBS Warburg, was appointed chief executive with a remit to substantially expand the business.

Thus far he has followed his brief with aplomb, increasing the estate agent’s branch network from 39 to 63 via a string of acquisitions. ‘We are targeting a minimum of 70 offices by this summer,’ assures Ziff, ‘and beyond that we’re looking for full saturation at about 200-250 offices nationwide within three to five years, at which point we’d be totally dominant within the £300,000 to £2 million house price bracket.’

Outside London, the estate agent market is very fragmented and Humberts – already one of the ten largest players in the UK – has a mere two per cent share. To fund its planned expansion it has £14.8 million sitting in the coffers following two recent fundraisings at 60p and 80p.

The ever-prudent Ziff maintains he will be focusing purely on profitable, best-of-breed acquisitions, predominantly in wealthy southern market towns, which he will buy with a mixture of cash and shares. Just as has been done with last year’s purchases, new acquisitions will be swiftly re-branded as Humberts, with their IT, insurance, communications and accounts functions centralised at the head office. The plan is that the power of a large, nationwide brand will enable the previously independent estate agents to pull in the ever-bigger instructions.

At present, residential sales account for 58 per cent of turnover, with lettings representing eight per cent, rural land sales 12 per cent, commercial property 16 per cent and other activities six per cent. In a buoyant property market, the £200,000 to £2 million bracket is growing quickest of all, and the commercial office sector is tipped for an upturn.

Much as you might expect of a chief executive trying to lower risk at his company, Ziff is looking to reduce the dominance of residential sales within the business mix by developing the counter-cyclical lettings business and building up the other revenue streams, particularly rural property/land and new home development business.

Last year, turnover rose by 450 per cent to £13.6 million, sending pre-tax profits up fourfold to £2 million and bringing earnings in at 3.9p a share. A 1.4p dividend was declared. Sales growth of 120 per cent to £29.9 million is forecast this year, from which profits of £4.8 million and 51 per cent earnings growth to 5.9p look achievable. Earnings are then expected to grow a further 24 per cent to 7.4p for 2008, which still outstrips forecast earnings growth at rival upmarket agent Savills, whose shares trade on a higher p/e. Investors should consider joining Ziff – and astute property tycoon Vincent Tchenguiz, who owns a quarter of the company – on the shareholder register. Buy.

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